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:

Interest Payable

The amount of interest expense that has been incurred but not yet paid by a company during a specific period.