Assertion (A) If the market forces of demand and supply are allowed to play freely, equilibrium will be automatically restored in course of time
Reason (R) Under the free exchange rate system, the automatic adjustments of the balance of payments can take place through changes in the variables like price, interest, income and capital flows.
Both (A) and (R) are true and (R) is the correct explanation of (A).
Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(A) is true, but (R) is false.
(A) is false, but (R) is true.
