Explain when a country would face a balance of payments deficit and when it would face a balance of payments surplus if it was operating under a fixed exchange rate system
What will be an ideal response?
Under a fixed exchange rate system, a country would face a balance of payments deficit when the supply of that country's currency exceeds the demand for the currency at the current exchange rate. The country would face a balance of payments surplus when the demand for its currency exceeds the supply of its currency at the current exchange rate.
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Which of the following best describes a "bubble"?
A) when the price of an asset reaches a new high B) an unsustainable increase in the price of a class of assets C) rapid increases in inflation D) when bond prices rise more quickly than stock prices
A decision to increase the parameter ? in the MP curve is an example of ________
A) autonomous easing B) leftward movement along the curve C) rightward movement along the curve D) endogenous response E) autonomous tightening