Q: Exchange rate refers to the price of one currency in terms of other currencies. Which of the following statements about exchange rates is correct?
(a)Under a fixed exchange-rate system, the government buys or sells its currency to keep the rate stable.
(b)In a pegged (managed) exchange-rate system, the rate is set and kept stable solely by the central bank without any market influence.
(c)Under a 'float-band system', exchange rates are strictly linked to gold reserves.
(d)In a crawling-peg system, exchange rates are fixed exclusively with reference to the US-dollar reserves.
Correct Answer: (d)
Detailed explanation coming soon.