Question: 1. Countries with a Current Account deficit will typically exhibit ( ). A Balance of Payment imbalance B a Capital and financial Account surplus C

1. Countries with a Current Account deficit will typically exhibit ( ).

  • A Balance of Payment imbalance
  • Ba Capital and financial Account surplus
  • Chigher exports than imports
  • Da Capital and financial Account deficit

2. Devaluation refers to a (an) ( ).

  • Adecrease in value of a floating currency
  • Bincrease in value of a floating currency
  • Cdecrease in value of a fixed currency
  • Dincrease in value of a fixed currency

3. Generally speaking, the appreciation of one countrys currency exchange value will ( ) relative price of its products, and ( ) net exports.

  • Adecrease, decrease
  • Bdecrease, increase
  • Cincrease, decrease
  • Dincrease, increase

4. In the foreign exchange market, which one is the supplier of U.K. pounds? ( )

  • Aan American wanting to import from the U.K.
  • Ban American wanting to travel in the U.K.
  • Ca British wanting to purchase the U.S. stocks
  • Da British wanting to remit the earnings from U.S. back to U.K.

5. Which one of the following mechanisms is NOT an automatic adjustment of the current account in fixed exchange rate system? ( )

  • Aprice adjustments
  • Bincome adjustments
  • Cinterest rate adjustments
  • Dmonetary adjustments

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