Under a System of Flexible Exchange Rates, the Portfolio Balance

question 15

Multiple Choice

Under a system of flexible exchange rates, the portfolio balance approach suggests that an increase in real income in a home country will lead to __________ of that country's Currency; under flexible rates, the monetary approach suggests that an increase in real Income in a home country __________ of that country's currency.

• A) a depreciation; will lead to an appreciation
• B) a depreciation; also will lead to a depreciation
• C) an appreciation; also will lead to an appreciation
• D) an appreciation; will lead to a depreciation

---

Definitions:

Food

Any nutritious substance that people or animals eat or drink in order to maintain life and growth.

Special Privileges

Exceptional rights, advantages, or immunities granted to individuals or groups, often beyond what is common.

Deviance

Occurs when someone departs from a norm and evokes a negative reaction from others.

Norm-breaking

Refers to actions or behaviors that deviate from widely accepted social norms or standards.