A Balance of Payments Crises Under Fixed Exchange Rates Occurs

question 18

Multiple Choice

A balance of payments crises under fixed exchange rates occurs when

• A) marginal returns on foreign exchange investments approach zero.
• B) a country runs out of foreign reserves.
• C) a country is in a liquidity trap.
• D) forward currency markets undergo high volatility.
• E) exports and imports expand beyond some point.

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Definitions:

Orderly Transfer

A well-organized and systematic process of passing authority, responsibility, or information from one entity to another.

Goods And Services

Products and activities provided in the marketplace that satisfy consumer needs and wants.

Seller To Buyer

The transfer of products, services, or assets from the seller to the buyer in a market transaction.

Ownership Utility

Orderly transfer of goods and services from the seller to the buyer; also called possession utility.