Which of the following is not a merit of the f = rate system?

Exchan>= rates are prone to speculative attack on a currency.

Movements in the exchan>= rate automatically take care of the surpluses and deficits in the BoP.

Lar>= stocks of foreign exchan>= reserves are not required.

CUET Economics - Which of the following is not a merit of the flexible exchange rate system? | PYQs + Solutions

CUET Economics 2025 15 May Shift 1

Macro

Medium

Exchange rates are prone to speculative attack on a currency.

Movements in the exchange rate automatically take care of the surpluses and deficits in the BoP.

Countries gain independence in conducting their monetary policies.

Large stocks of foreign exchange reserves are not required.

✅ Correct Option: 1