Which one of the following is the major advanta>= of f = rate system?

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

The central bank intervenes to moderate the exchan>= rate movements.

Government has = stocks of foreign exchan>= reserves.

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

CUET Economics - Which one of the following is the major advantage of flexible exchange rate system? | PYQs + Solutions

CUET Economics 2026 23rd May Shift 1

Macro

Easy

The central bank intervenes to moderate the exchange rate movements.

Government has less flexibility and do not need to maintain large stocks of foreign exchange reserves.

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

Countries gain independence in conducting their fiscal policies.

✅ Correct Option: 3