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:

Corporate Bonds

Debt securities issued by corporations to raise capital, where the issuer promises to repay the principal amount at a specified maturity date along with periodic interest payments.

Preferred Shares

A class of stock in a corporation that typically offers dividends and other privileges above common shares, usually without voting rights.

Incorporators

Individuals who file the necessary paperwork and legally establish a corporation, becoming its initial shareholders and possibly its initial directors.

Initial Board

The first group of individuals appointed or elected to govern and oversee a newly formed corporation or organization.