Option 4: (C), (B), (D), (A) -> This represents the correct logical sequence of events in exchange rate management. First, (C) the government identifies the policy objective of encouraging exports. To achieve this, (B) the government fixes the exchange rate higher than the market rate (meaning more domestic currency per dollar, making domestic currency cheaper and exports competitive). This policy leads to (D) increased export earnings causing supply of dollars to exceed demand. Finally, (A) the central bank intervenes by purchasing the excess dollars to maintain the fixed exchange rate and prevent it from falling below the desired level. This sequence demonstrates how fixed exchange rate regimes require active central bank intervention to maintain the peg. -> correct
Arrange the following in correct sequence with respect to exchnage rate :- (A) The central bank purchases dollars to absorb the excess supply. (B)…
CUET UG 2025 — Economics Macro
Arrange the following in correct sequence with respect to exchnage rate :-
(A) The central bank purchases dollars to absorb the excess supply.
(B) The exchange rate is fixed by the government higher than the market rate of exchange.
(C) The government wants to encourage exports.
(D) Supply of the dollars exceeds the demand for the dollar.
Choose the correct answer from the options given below:
- (B), (A), (D), (C).
- (D), (A), (C), (B).
- (C), (A), (D), (B).
- (C), (B), (D), (A).
Held on 28 May 2025 · Verified 13 Jul 2026.
Options
- A
(B), (A), (D), (C).
- B
(D), (A), (C), (B).
- C
(C), (A), (D), (B).
- D
(C), (B), (D), (A).
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