Under a Pegged Exchange Rate System, Which Does NOT Explain

question 23

Multiple Choice

Under a pegged exchange rate system, which does NOT explain why a country would have a balance-of-payments deficit?

• A) very high rates of inflation occur domestically
• B) foreigners discriminate against domestic products
• C) technological advance is superior abroad
• D) the domestic currency is undervalued relative to other currencies

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Definitions:

Perpetual Inventory System

An inventory accounting system that records goods transactions in real-time.

FOB Shipping Point

A shipping term indicating that the buyer assumes responsibility for the goods and the associated costs once the goods leave the seller's premises.

Ending Inventory

Ending inventory is the total value of all inventory, including raw materials, work-in-progress, and finished goods, that a company has at the end of an accounting period.

FOB Destination

A shipping term indicating that the seller bears delivery costs and risks until the goods reach the buyer's specified location.