Read and download CBSE Class 12 Economics Foriegn Exchange Rates chapter in NCERT book for Class 12 Other Subjects. You can download latest NCERT eBooks chapter wise in PDF format free from Studiestoday.com. This Other Subjects textbook for Class 12 is designed by NCERT and is very useful for students. Please also refer to the NCERT solutions for Class 12 Other Subjects to understand the answers of the exercise questions given at the end of this chapter
NCERT Book for Class 12 Other Subjects Foreign Exchange Rates
Class 12 Other Subjects students should refer to the following NCERT Book chapter Foreign Exchange Rates in standard 12. This NCERT Book for Grade 12 Other Subjects will be very useful for exams and help you to score good marks
Foreign Exchange Rates NCERT Book Class 12
UNIT 10
Merits and demerits of fixed and flexible foreign exchange rates.
Merits of fixed exchange rate:
1. It ensures stability in exchange rate. The exporters and importers have not to operate under uncertainty about the exchange rate. Thus it promotes foreign trade.
2. It promotes capital movements. Fixed exchange rate system attracts foreign capital because a stable currency does not involve any uncertainties about exchange rate that may cause capital loss,
3. Stable exchange rate prevents capital outflow
4. It prevents speculation in foreign exchange market
5. It forces the government to keep inflation in check. In case of fixed exchange rate system,inflation causes balance of payments deficit resulting in depletion of foreign exchange reserves.
Demerits of fixed exchange rate:
1. It contradicts the objective of having free markets
2. Under this system, countries with deficits in balance of payment run down this stock of gold and foreign currencies. This can create serious problem for them. They may be forced to devalue their currency. On the other hand countries with surplus in balance of payments will face the problem of inflation.
3. There may be undervaluation or overvaluation of currency. If the fixed exchange rate is at a level which is lower then the market level i.e. at which demand for foreign currency far exceeds its supply, its will result in deficit in balance of payment. If it is higher than the market level i.e. at which the supply exceeds demand then it may create inflationary pressure because of balance of payments surplus. It is difficult to fix a rate that may prove to be equilibrium rate
Merits of flexible exchange rate system
1. It eliminates the problem of overvaluation or undervaluation of currencies, Deficit or surplus in balance of payments is automatically corrected under this system.
2. It frees the government from problem of balance of payments.
3. There is no need for the government to hold any reserves.
4. It enhances the efficiency in the economy by achieving optimum resource allocation.
Demerits of flexible exchange rate system
1. It creates situations of instablility and uncertainty. Wide fluctuations in exchange rate are possible. This hampers foreign trade and capital movements between countries.
2. It encourages speculation which may lead to larger uncertainties and fluctuations.
3. The uncertainty caused by currency fluctuations can discourage international trade and investment.
Please refer to the link below for - CBSE Class 12 Economics-Foriegn Exchange Rates
Other Subjects NCERT Book Class 12 Foreign Exchange Rates
The above NCERT Books for Class 12 Other Subjects Foreign Exchange Rates have been published by NCERT for latest academic session. The textbook by NCERT for Foreign Exchange Rates Other Subjects Class 12 is being used by various schools and almost all education boards in India. Teachers have always recommended students to refer to Foreign Exchange Rates NCERT etextbooks as the exams for Class 12 Other Subjects are always asked as per the syllabus defined in these ebooks. These Class 12 Foreign Exchange Rates book for Other Subjects also includes collection of question. We have also provided NCERT solutions for Class 12 Other Subjects which have been developed by teachers of StudiesToday.com after thorough review of the latest book and based on pattern of questions in upcoming exams for Class 12 students.
NCERT Book Class 12 Other Subjects Foreign Exchange Rates
The latest NCERT book for Foreign Exchange Rates pdf have been published by NCERT based on the latest research done for each topic which has to be taught to students in all classes. The books for Class 12 Other Subjects Foreign Exchange Rates are designed to enhance the overall understanding of students. All Class 12 NCERT textbooks have been written in an easy to understand language which will help to enhance the overall level of Class 12 students.
Foreign Exchange Rates NCERT Book Class 12 Other Subjects
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Class 12 Other Subjects Foreign Exchange Rates NCERT Book
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Class 12 Foreign Exchange Rates NCERT Book Other Subjects
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