Which Exchange Rate Mechanism Is Intended to Insulate the Balance

question 6

Multiple Choice

Which exchange rate mechanism is intended to insulate the balance of payments from short-term capital movements while providing exchange rate stability for commercial transactions?

• A) dual exchange rates
• B) managed floating exchange rates
• C) adjustable pegged exchange rates
• D) crawling pegged exchange rates

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Definitions:

Tax Deductible

Expenses that reduce taxable income, as they can be subtracted directly from one's gross income before calculating the tax owed.

U.S. Tax System

The structured process by the government for collecting taxes from individuals, businesses, and other entities to fund public services and projects.

Operating Leverage

An indicator of how increases in revenue lead to expansions in operating income, showing the level of fixed expenses within a company's cost framework.

Fixed Costs

Costs that do not change with the level of goods or services produced by a business.