For each of the following situations, assuming fixed exchange rates, tell what will happen to the balance
Question:
For each of the following situations, assuming fixed exchange rates, tell what will happen to the balance of payments on current and capital accounts in the United States, ceteris paribus:
a. Domestic income increases.
b. Domestic interest rates fall.
c. Foreign income increases.
d. Foreign interest rates fall.
e. Domestic inflation increases.
f. Foreign inflation increases.
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Situation Change in Current Account Balance Change in Capital Account Balance a Domestic income increases Increases Decreases b Domestic interest rates fall No change Decreases c Foreign income increa...View the full answer
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Related Book For
Financial System Of The Economy Principles Of Money And Banking
ISBN: 9780765622464
5th Edition
Authors: Maureen Burton,Bruce Brown
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