A primary objective of dual exchange rates is to allow a country the ability to insulate its balance of payments from net:
A) Current account transactions
B) Unilateral transfers
C) Merchandise trade transactions
D) Capital account transactions

Question

Quizplus · Accepted Answer

Dual exchange rates are often used by countries to manage their capital account transactions and insulate their balance of payments from volatility. By having a separate exchange rate for capital account transactions, countries can encourage or discourage capital inflows or outflows, control the demand for foreign currency, and maintain a stable exchange rate for current account transactions. Therefore, the correct answer is D - capital account transactions.

A Primary Objective of Dual Exchange Rates Is to Allow