Under a floating exchange rate system with mobile international capital, it is always true that current account
a. deficit + capital account surplus = trade deficit.
b. surplus ? capital account surplus = trade deficit.
c. surplus + capital account deficit = 0.
d. surplus ? capital account surplus = 0.
c
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Suppose Brazil has a comparative advantage in coffee production and Mexico has a comparative advantage in tomato production. If these two countries specialize and trade, which of the following is true?
A. Brazilian tomato producers are worse off. B. Brazilian coffee producers are worse off. C. Mexican tomato producers are worse off. D. Mexican coffee producers are better off.
An increase in which of the following determinants of demand will have an ambiguous (uncertain) effect on price?
A. price of a complement B. taste C. price of a substitute D. income
A city's decision to limit smoking in public areas is an example of
A. Market success. B. The invisible hand at work. C. The market mechanism at work. D. Government intervention.
During the years 1970-1986, the merchandise balance of trade in the U.S. shifted from a
A. trade deficit to a trade surplus. B. small trade deficit to a large trade surplus. C. trade surplus to a large trade deficit. D. small trade surplus to a large trade surplus.