Under a flexible exchange rate system, the rate that equates demand and supply in the exchange rate market also equates the
a. value of the nation's merchandise exports with the value of its merchandise imports.
b. value of the nation's purchases of goods, services, and assets from foreigners with the value of the nation's sales of these items to foreigners.
c. debit and credit items on current account transactions.
d. debit and credit items on capital account transactions.
B
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Which of the following is true?
A) When real GDP equals potential GDP, both equal nominal GDP. B) Nominal GDP fluctuates around real GDP. C) Real GDP fluctuates around nominal GDP. D) Potential GDP fluctuates around real GDP. E) Real GDP fluctuates around potential GDP.
According to economists of the rational expectations school, _____
a. the passive approach must be adopted because they believe the economy is too complex b. individual forecasts about policies can never be right c. anticipated monetary policy can affect the output level d. discretionary policy can stabilize the economy e. discretionary policy should be completely avoided
For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
a. There are many close substitutes for this good. b. The good is a luxury. c. The market for the good is broadly defined. d. The relevant time horizon is long.
An increase in government spending by $100 would, if the MPC = 0.90, result in an increase in real GDP by:
A. $1,000. B. $9,000. C. $900. D. $190.