Arrange the following statements in correct sequence relating to change in exchange.
(A) The Central Bank intervenes to purchase dollars rate between Dollars and Rupee in the foreign exchange market.
(B) The government sets the exchange rate above the equilibrium exchange rate.
(C) This will absorb the excess supply of dollars in the foreign exchange market.
(D) It will result in excess supply of dollars in the foreign exchange market.
Choose the correct answer from the options given below :
Arrange the following statements in correct sequence relating to change in exchange.
(A) The Central Bank intervenes to purchase dollars rate between Dollars and Rupee in the foreign exchange market.
(B) The government sets the exchange rate above the equilibrium exchange rate.
(C) This will absorb the excess supply of dollars in the foreign exchange market.
(D) It will result in excess supply of dollars in the foreign exchange market.
Choose the correct answer from the options given below :
Solution
Logical sequence when government fixes exchange rate above equilibrium:
(B) Government sets exchange rate above equilibrium
(D) Results in excess supply of dollars
(A) Central Bank intervenes to purchase dollars
(C) This absorbs the excess supply of dollars
Hence the correct order is B, D, A, C.
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