Which Chain of Events Would Promote Payments Equilibrium for a Deficit

question 56

Multiple Choice

Which chain of events would promote payments equilibrium for a deficit nation,according to the price-adjustment mechanism?

• A) Increasing money supply--increasing domestic prices--rising imports--falling exports
• B) Increasing money supply--falling domestic prices--rising imports--falling exports
• C) Decreasing money supply--increasing domestic prices--falling imports--rising exports
• D) Decreasing money supply--decreasing domestic prices--falling imports--rising exports

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Definitions:

Scarce Means

The limited resources available to meet unlimited wants and needs in an economy, necessitating choices and priorities.

Production

The process of creating goods and services.

Human Wants

The desires and needs of individuals or society that drive demand for products, services, and resources.

Opportunity Cost

The forgone benefit that would have been derived by an option not chosen.