Suppose That at the Fixed Exchange Rate Implied by the Gold

question 159

Multiple Choice

Suppose that at the fixed exchange rate implied by the gold standard, the quantity demanded of Chahidi's currency exceeded the quantity supplied. This implies that

• A) Chahidi has a surplus in its balance of payments.
• B) Chahidi has a deficit in its balance of payments.
• C) Chahidi has a deficit in its capital account.
• D) The exchange rate will fall to restore equilibrium.

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