The Expectation of Future Revaluation Causes a Balance of Payments

question 40

Multiple Choice

The expectation of future revaluation causes a balance of payments crisis marked by

• A) a sharp rise in reserves and a fall in the home interest rate below the world interest rate.
• B) a sharp fall in reserves and an even bigger fall in the home interest rate below the world interest rate.
• C) a sharp fall in reserves and a rise in the home interest rate above the world interest rate.
• D) a sharp rise in reserves and an even greater rise in the home interest rate above the world interest.
• E) a sharp fall in reserves and an unchanged home interest rate.

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Definitions:

Extraction Cost

Extraction cost is the expense associated with removing raw materials or natural resources from the Earth, factoring in labor, energy, and technology requirements.

ITQs

Individual Transferable Quotas; regulatory tools used in fisheries management to control the total amount of fish that can be caught by allocating specific allowances to fishermen or companies.

Sockeye Salmon

A species of salmon found in the Pacific Ocean, known for its red flesh and high commercial value.

Market Price

The present cost at which a service or asset is available for purchase or sale on the market.