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

question 5

Multiple Choice

In the monetary approach to the balance of payments and the exchange rate, if there is an excess demand for money, the result is a balance-of-payments __________ in a fixed exchange rate situation and __________ of the country's currency in a flexible exchange Rate situation.

• A) surplus; an appreciation
• B) surplus; a depreciation
• C) deficit; an appreciation
• D) deficit; a depreciation

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