Which Exchange-Rate Mechanism Is Intended to Insulate the Balance of Payments

question 107

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:

Shareholders

Individuals or entities that own shares in a corporation, giving them partial ownership and a stake in the company's profits and decision-making.

Limited Partnership

A business partnership where at least one partner has unlimited liability and one or more partners have limited liability, only responsible for the money they have invested.

Legal Entity

An organization or structure that is recognized by law as having rights and responsibilities, such as a corporation, partnership, or trust.

Stock

Shares of ownership in a company, representing a claim on the company's assets and earnings.