The Nation of Redland Reported That Its Imports for the Previous

question 197

Multiple Choice

The nation of Redland reported that its imports for the previous year were $4 billion greater than its exports. During the same period, Redland reported a favorable balance of payments. This information suggests:

• A) Redland has made an error in their reporting. The nation must have had a balance of payments deficit since more money flowed out of Redland for imports than flowed into the country for its exports.
• B) Redland's gold reserves have increased in value.
• C) money inflows from tourism, foreign aid, foreign investment and other sources more than offset Redland's trade deficit.
• D) Redland devalued their currency to obtain a more favorable exchange rate.