With floating exchange rates, BOP equilibrium is restored by

A) trade restrictions.
B) earnings from foreign investments.
C) exchange rate changes.
D) All of the above.


C

Economics

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A structured and simplified version of reality that can be used to explain real-world behavior is called

A) an economic model. B) a rationality assumption. C) a postulate. D) a normative alternate reality.

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A seller is willing to sell 5 units of a good at a minimum price of $1 per unit. The reservation value of the seller in this case is:

A) $1. B) $5. C) $6. D) $10.

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Which of the following is the BEST example of a private good?

A) a can of Mountain Dew B) fish in the ocean C) cable television D) national defense

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In the liquidity trap, the money demand curve

A) is horizontal. B) is vertical. C) is negatively sloped. D) is positively sloped.

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