Question : Assertion: A country with a fixed exchange rate regime has limited control over its monetary policy.
Reason: In a fixed exchange rate system, the central bank must intervene to maintain the exchange rate at the specified level, which restricts its ability to independently set interest rates.
Option 1: True, as the central bank needs to prioritize exchange rate stability over domestic monetary policy objectives.
Option 2: True, only if the country has a large foreign exchange reserve.
Option 3: False, as fixed exchange rate regimes provide more flexibility in implementing monetary policy.
Option 4: False, as countries with fixed exchange rates have complete control over their monetary policy.
Correct Answer: True, as the central bank needs to prioritize exchange rate stability over domestic monetary policy objectives.
Solution : The correct answer is (a) True, as the central bank needs to prioritize exchange rate stability over domestic monetary policy objectives.
A country with a fixed exchange rate regime indeed has limited control over its monetary policy. In a fixed exchange rate system, the central bank intervenes in the foreign exchange market to maintain the exchange rate at the specified level. This intervention often requires the central bank to use its foreign exchange reserves and adjust interest rates to align with the target exchange rate. As a result, the central bank's ability to independently set interest rates and pursue domestic monetary policy objectives is constrained by the need to prioritize exchange rate stability. Therefore, countries with fixed exchange rates have less flexibility in implementing monetary policy compared to countries with floating exchange rates.
Question : Statement 1: Planning helps organizations adapt to changes.
Statement 2: Planning reduces the need for flexibility.
Option 1: Statement 1 correct, Statement 2 incorrect.
Option 2: Statement 1 incorrect, Statement 2 correct.
Option 3: Both statements are correct.
Option 4: Both statements are incorrect.
Question : Case Study 16: Overcoming Communication Challenges at ABC Tech
ABC Tech prioritizes overcoming communication challenges for seamless information exchange. Consider the following scenario to answer the questions.
Question :
At ABC Tech, what is a demerit of formal communication?
Option 1: Enhanced accuracy of information
Option 2: Limited flexibility in message delivery
Option 3: Hindrance to employee engagement
Option 4: Propagation of rumors and misinformation
Question : Case Study: PQR Software Solutions
PQR Software Solutions is a startup that provides innovative software solutions. The company is planning to introduce a new customer support system.
Question:
To overcome the limitations of planning, PQR Software Solutions can focus on:
Option 1: Incorporating flexibility in the plans
Option 2: Relying solely on top management's decisions
Option 3: Limiting employee involvement
Option 4: Adopting a reactive approach
Question : Assertion: Policies guide decision-making at all levels of an organization.
Reason: Policies are rigid and do not allow for any flexibility.
Option 1:
Both assertion and reason are correct, and the reason is a correct explanation.
Option 2: Both assertion and reason are correct, and the reason is not correct explanation.
Option 3: Assertion is false, but the reason is correct.
Option 4: Assertion is correct, but the reason is false.
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