Assertion (A): Managed floating tries to combine the merits of fixed and flexible rates.
Reason (R): The market sets the rate, while the central bank smooths out sharp movements.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

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CorrectNot quiteAnswer A

Correct answer: A

Market setting gives flexibility; intervention gives some stability. R explains A.

Concept: Why managed floating
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The rule this testsManaged floating

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Assertion (A): Managed floating tries to combine the merits of fixed and flexible rates.Reason (R): The market sets the rate, while the central bank smooths out sharp movements.

Explanation

Assertion (A): Managed floating tries to combine the merits of fixed and flexible rates.
Reason (R): The market sets the rate, while the central bank smooths out sharp movements.