If a nation has flexible exchange rates and its current and captial accounts equal zero, then the:
a. Financial account must be positive
b. Financial account must be zero.
c. Reserves account can be positive or negative depending on the size of the budget deficit and exchange rate.
d. Financial account plus reserves account must equal zero.
.B
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Under a fixed exchange rate regime, if the domestic currency is initially overvalued, that is, below par, the central bank must intervene to purchase the ________ currency by selling ________ assets
A) domestic; foreign B) domestic; domestic C) foreign; foreign D) foreign; domestic
An efficient allocation of productive inputs requires that:
a. each output has the same rate of technical substitution among inputs used. b. each output has the same marginal rate of substitution for consumers. c. each pair of outputs has the same rate of product transformation. d. each individual has the same marginal rate of substitution between outputs.
Which of the following is the category to which the largest portion of households' personal income is allocated?
a. taxes collected by government b. savings c. purchases of services d. purchases of durable goods e. purchases of nondurable goods
If a small country imposes a tariff on imported motorcycles, the world price of motorcycles will ________ and the domestic price of motorcycles will
A. remain constant; fall. B. fall; rise. C. rise; fall. D. remain constant; rise.