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Open Economy Macroeconomics

Question
CBSEENEC12013524
Wired Faculty App

Give meaning of managed floating exchange rate.

Solution

Managed floating exchange rate system is the combination of two systems of exchange rate, namely, fixed exchange rate and floating exchange rate. On one hand, the foreign exchange market is allowed to operate freely and on the other hand, there is an official declaration of rules or guidelines for the intervention by the monetary authority. That is, under this system the exchange rate is determined through the market forces with intervention of the monetary authority as and when required. 

Some More Questions From Open Economy Macroeconomics Chapter

What is balance of trade? 
or
Which two transactions determine BOT?
or
What is the difference between the values of exports and imports of goods called? 
or
When will BOT show a surplus? 
or
When is there deficit in BOT?
or
What is balance of visible items in BOP accounts called?

BOT shows a deficit of र 5,000 crores and value of imports are र 9,000 crores. What is the value of exports?

The value of a country’s import of goods is र 200 crores, and value of export is र 250 crores. Find out its BOT. 

A country’s balance of trade is र (–) 60 crores and value of import of goods is र 100 crores. out value of export of goods. 

What is meant by balance of payment (BOP) account?
or
What does BOP account record?
or
Where are borrowings from abroad recorded and why
 

Balance of payment always balances. Comment.

When does a situation of deficit/surplus in BOP arise?
or
Explain meaning of deficit in BOP.

Distinguish between BOT and BOP. 

Distinguish between current account and capital account of BOP account. Mention any two transactions (components) of each.

State any four items of current account of BOP account.

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