All of the given statements are true .
(A) Managed floating is also called dirty floating - True
- Managed floating refers to a system where the exchange rate is allowed to fluctuate with some intervention from the government or central bank. This intervention can involve buying or selling currencies to influence the exchange rate. "Dirty floating" is a term often used to describe this type of managed exchange rate system because it implies that it is not purely determined by market forces but includes government or central bank interventions.
(B) Making domestic currency cheaper by the government is called devaluation - True
- Devaluation refers to a deliberate downward adjustment in the value of a country's currency relative to other currencies, typically by the government or central bank. This is done to make the domestic currency less expensive in the foreign exchange market, encouraging exports and discouraging imports.
(C) Exchange rate determined by the market forces of demand and supply, known as a floating exchange rate - True
- In a floating exchange rate system, the exchange rate is determined by the interactions of supply and demand in the foreign exchange market. It can freely fluctuate based on market dynamics without significant government or central bank interventions.
(D) In a fixed exchange rate system, the government fixes the exchange rate - True
- In a fixed exchange rate system, the government or central bank sets a specific value for the exchange rate and commits to maintaining that rate. It does so by buying or selling its own currency in the foreign exchange market to ensure that the exchange rate remains at the fixed level.
So, all four statements (A, B, C, and D) are true and the correct answer is (1) (A), (B), (C), and (D) Only.