Given below are two statements, one is labelled asAssertion (A) :and the other as Reason (R).Assertion (A):The value of national currency determined by demand and supply of foreign currency is called flexible exchange rate.Reason (R):Demand and supply of the foreign currency is being determined by the Central Bank.Select the correct answer from the codes given below:

1. A

   Both (A) and (R) are true and (R) is the correct explanation of (A).

   Option (a) claims both Assertion and Reason are true with correct explanation. However, the Reason is factually incorrect.

2. B

   (A) is false, but (R) is true.

   Option (b) claims Assertion is false and Reason is true. This inverts the actual validity of the two statements.

3. C

   Both (A) and (R) are true, but (R) is not the correct explanation of (A).

   Option (c) claims both statements are true but Reason does not explain Assertion. This fails because the Reason is false.

4. D

   (A) is true, but (R) is false.

   Option (d) correctly states that the Assertion is true because a flexible exchange rate is indeed determined by the market forces of demand and supply of foreign currency, whereas the Reason is false because foreign currency demand and supply are determined by market participants rather than solely by the Central Bank under pure flexible rates, making this the longest and correct option.

Summary. Official key is (d) as Assertion is true, but Reason is false. Under a flexible exchange rate system, the exchange rate is determined by the market forces of demand for and supply of foreign currency. The Central Bank does not determine the demand and supply of foreign currency in a purely flexible regime, as those are driven by international trade, investments, and speculation by market agents. Therefore, the Reason provided is factually incorrect while the Assertion remains entirely accurate.