Question : Which of the following is not a type of exchange rate system?
Option 1: Fixed exchange rate
Option 2: Floating exchange rate
Option 3: Hybrid exchange rate
Option 4: Dual exchange rate
Correct Answer: Hybrid exchange rate
Solution : The correct answer is (c) Hybrid exchange rate
A hybrid exchange rate is not a recognized type of exchange rate system. The commonly recognized types of exchange rate systems are:
a) Fixed exchange rate: The value of a country's currency is pegged to a specific reference currency or a basket of currencies, and the exchange rate is maintained at a fixed level.
b) Floating exchange rate: The value of a country's currency is determined by market forces of supply and demand, and the exchange rate fluctuates freely.
d) Dual exchange rate: A system in which a country has two or more official exchange rates for different purposes or transactions. This is relatively rare and not widely used.
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