In the Monetary Approach to the Balance of Payments and the Exchange

question 12

Multiple Choice

In the monetary approach to the balance of payments and the exchange rate,

• A) an increase in the demand for money (with a fixed supply) would cause a balance-of-Payments deficit under fixed exchange rates.
• B) an increase in the supply of money (with a fixed demand) would cause a balance- Of-payments surplus under fixed exchange rates.
• C) a decrease in the demand for money (with a fixed supply) would cause a balance-of- Payments deficit under fixed exchange rates.
• D) an increase in the supply of money (with a fixed demand) would cause the domestic Currency to appreciate under flexible exchange rates.

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Definitions:

Schizophrenic Disorders

A category of severe mental disorders characterized by disorganized and delusional thinking, inappropriate emotions, and auditory hallucinations.

Delusions

Delusions are strongly held beliefs despite superior evidence to the contrary, often found in mental health disorders such as schizophrenia.

Hallucinations

Perceptual experiences without an actual external stimulus, often auditory or visual, experienced as real.

Disorganized Speech

A symptom of schizophrenia and other psychotic disorders characterized by incoherent and nonsensical talk, making it hard to understand.