Match List - I with List - II.

	List - I		List - II
(A)	Flexible exchange rate	(I)	Market forces
(B)	Devaluation	(II)	Pegged exchange rate
(C)	Fixed exchange rate	(III)	Floating exchange rate
(D)	Depreciation	(IV)	Government

Choose the correct answer from the options given below :

The correct option is (A) - (I), (B) - (IV), (C) - (II), (D) - (III)

Key Points

• Flexible Exchange Rate:

  • Definition: An exchange rate that is determined by the free market through supply and demand for the currency.
  • Key feature: It fluctuates based on market conditions.
  • Match: Market forces.

• Devaluation:

  • Definition: A deliberate downward adjustment to the value of a country's currency relative to another currency, group of currencies, or standard.
  • Key feature: Typically done by the government or monetary authority.
  • Match: Government.

• Fixed Exchange Rate:

  • Definition: An exchange rate that is pegged or fixed by the government or central bank at a certain level.
  • Key feature: It does not fluctuate with market conditions; instead, it remains fixed.
  • Match: Pegged exchange rate.

• Depreciation:

  • Definition: A decrease in the value of a currency in the context of a floating exchange rate system.
  • Key feature: It occurs due to market forces and reflects changes in supply and demand.
  • Match: Floating exchange rate.