In a System of Fixed Exchange Rates, the Automatic Balance-Of-Payments

question 1

Multiple Choice

In a system of fixed exchange rates, the automatic balance-of-payments adjustment process for a country with a balance-of-payments deficit would theoretically involve, among other things, __________ in the interest rate and __________ in national income.

• A) a decrease; a decrease
• B) a decrease; an increase
• C) an increase; a decrease
• D) an increase; an increase

---

Definitions:

Central Nervous System

The part of the nervous system that consists of the brain and spinal cord, responsible for processing and sending out nervous signals.

Social Influence Theory

A theory that examines how individual thoughts, actions, and feelings are influenced by social interactions and the presence of others.

Hypnotic Subjects

Individuals who are under hypnosis and are more open to suggestions, alterations in perception, and changes in behavior or thought processes.

Hypnosis

A trance-like state of focused attention, reduced peripheral awareness, and increased suggestibility.