Under a System of Fixed Exchange Rates Where the Foreign

question 86

Multiple Choice

Under a system of fixed exchange rates where the foreign exchange market is in equilibrium and neither country has a balance-of-payments deficit or surplus,an increase in imports of French goods by Japanese consumers,ceteris paribus,would result in a

• A)Market surplus of francs.
• B)Balance-of-trade deficit for France.
• C)Balance-of-payments deficit for Japan.
• D)Balance-of-payments surplus for Japan.