If a Country with High Unemployment, a Balance of Payments

question 40

Multiple Choice

If a country with high unemployment, a balance of payments deficit, and fixed exchange rates decides to abandon it fixed exchange rate and allow its exchange rate to float, which among the following will be a probable effect?

• A)Its currency will depreciate, increasing international competitiveness and leading to higher aggregate demand and an improvement in the current account.
• B)Its currency will appreciate, increasing international competitiveness and leading to higher aggregate demand and an improvement in the current account.
• C)Its currency will depreciate, decreasing international competitiveness and leading to lower aggregate demand and an improvement in the current account.
• D)Its currency will appreciate, decreasing international competitiveness and leading to lower aggregate demand and a worsening of the current account.

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Definitions:

RULLCA

Revised Uniform Limited Liability Company Act; a standard law adopted by some states to govern the formation, operation, and dissolution of LLCs.

RULLCA

The Revised Uniform Limited Liability Company Act, which provides a comprehensive model act for the formation, operation, and dissolution of LLCs in the United States.

Default Rules

Default rules are legally established standards that apply when parties to a contract do not stipulate their own arrangements or when such arrangements are not legally enforceable.

LLC

Stands for Limited Liability Company, a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.