If a Country Has a Balance of Payments Deficit and Wishes

question 146

Multiple Choice

If a country has a balance of payments deficit and wishes to maintain the fixed value of its currency, it will generally

• A)sell its own currency for foreign currencies.
• B)buy its own currency with foreign reserves.
• C)decrease taxes to increase domestic disposable income.
• D)increase the money supply to keep interest rates down.

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Definitions:

Preconditions

Necessary conditions that must exist or be met before a particular action can occur.

Integrative Negotiation Process

is a collaborative approach to negotiation in which parties work together to find a mutually beneficial outcome, focusing on interests rather than positions.

Motivation

The reason or reasons one has for acting or behaving in a particular way; the driving force behind actions.

Commitment

A binding pledge or dedication to a cause, activity, or goal, often implying a strong emotional or logical attachment.