Which Statement Best Describes the Current Account Balance in the Short

question 21

Multiple Choice

Which statement best describes the current account balance in the short run?

• A) Monetary expansion lowers the current account balance.
• B) Monetary expansion keeps the current account balance the same.
• C) Fiscal expansion increases the current account balance.
• D) Fiscal expansion keeps the current account balance the same.
• E) Monetary expansion increases the current account balance.

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Definitions:

Variance

A statistical measure of the dispersion of returns for a given security or market index.

Elasticity

A measure of how much the demand or supply of a product changes in relation to a change in one of its determinants like price.

Hedge Ratio

A ratio used to reduce financial risk, representing the proportion of a position hedged to the total position size.

Hedge Ratio

The ratio used to manage risk in financial portfolios, determining the size of a position required to offset potential losses.