A significant problem of a dual exchange rate system is that it
A)is difficult to administer.
B)leads companies to pursue rent-seeking behavior.
C)promotes black markets.
D)all of the above.
E)none of the above.

Question

Quizplus · Accepted Answer

All of the options listed are significant problems of a dual exchange rate system. The administration of such a system can be complex and difficult, with multiple rates to keep track of and implement. Companies may engage in rent-seeking behavior, where they try to profit by obtaining foreign currency at the lower rate and then selling it for a higher rate, instead of focusing on productive economic activities. Additionally, a dual exchange rate system can encourage the growth of black markets, where individuals and organizations seek to obtain foreign currency through illegal means.

A Significant Problem of a Dual Exchange Rate System Is