Which of the following statements is correct:I. Crawling peg regime allows the currency to depreciate gradually over time within a limited range;II. Free float can be characterised by supply and demand forces determining the exchange rate with complete independence from government;III. According to linked exchange rate regime, one currency is directly linked to the weighted average of a basket of major currencies such as USD, EUR and GBP;IV. Exchange rate regimes are established each nation-state, or monetary union;V. Managed float regime used to be popular in the past but recently the major economies have established the floating exchange rate regime.Question 5Select one:a.All of the statement are correctb.All of the statement are falsec.Only I is correctd.Only I and V are correcte.Only I, II, III and V are correctf.Only II and V are correctg.Only II and III are correcth.Only III is correcti.Only IV is correctj.Only II is correctk.Only II and IV are correct

The correct answer is e. Only I, II, III and V are correct.

Explanation:

I. Crawling peg regime allows the currency to depreciate gradually over time within a limited range; - This is correct. A crawling peg is a system of exchange rate adjustment in which a currency with a fixed exchange rate is allowed to fluctuate within a band of rates.

II. Free float can be characterised by supply and demand forces determining the exchange rate with complete independence from government; - This is correct. In a free-floating exchange rate system, the exchange rate is determined by supply and demand on the foreign exchange market.

III. According to linked exchange rate regime, one currency is directly linked to the weighted average of a basket of major currencies such as USD, EUR and GBP; - This is correct. A linked exchange rate system is a type of exchange rate regime to link the exchange rate of a currency to another. It is the exchange rate system implemented in Hong Kong to stabilise the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD).

IV. Exchange rate regimes are established each nation-state, or monetary union; - This is incorrect. Exchange rate regimes are established by each nation-state or monetary union, not each nation-state, or monetary union.

V. Managed float regime used to be popular in the past but recently the major economies have established the floating exchange rate regime. - This is correct. A managed float is an exchange rate system where the currency value is allowed to fluctuate between a certain range, but the central bank will intervene to prevent significant changes. However, many major economies have moved towards a floating exchange rate regime.