Under a system of flexible exchange rates, in the long run, a nation's balance on current account and capital account transactions will
a. increase continuously.
b. decrease continuously.
c. tend to net out to zero, indicating a balance between the debits and credits.
d. tend to increase if the nation is running a balance of trade surplus and decrease if it is running a balance of trade deficit.
C
You might also like to view...
What are the three stages of constructing the CPI?
What will be an ideal response?
What are tax loopholes and what are their effects?
What will be an ideal response?
Which of the following situations would be inconsistent with the others?
A) A deficit in the current account B) gross national expenditure being greater than gross national disposable income C) Net lending to the rest of the world D) A surplus in the financial account and capital account
An economy with a trade surplus must also have:
A. positive net capital inflows. B. a budget surplus. C. a trade deficit. D. positive net capital outflows.