Other fundamental things being equal, a decrease in the exchange rate value of domestic currency will cause the current account to
A. overshoot its long-run value.
B. move toward a surplus.
C. move toward a long-run deficit.
D. equal the official settlements balance.
Answer: B
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When quantity supplied equals quantity demanded, there is:
a. disequilibrium b. excess quantity supplied. c. a market-clearing price (equilibrium price). d. excess quantity demanded. e. a shortage.
The Wall Street Journal publishes an exchange rate of US$/C$ = 0.714, where US$ represents the U.S. dollar and C$ represents the Canadian dollar. What does this mean?
a. The Canadian dollar price of one U.S. dollar is US$0.714. b. The Canadian dollar price of one U.S. dollar is C$0.714. c. The U.S. dollar price of one Canadian dollar is C$1.40. d. The U.S. dollar price of one Canadian dollar is US$1.40 e. The U.S. dollar price of one Canadian dollar is US$0.714.