Under a System of Flexible Exchange Rates, in the Long

question 60

Multiple Choice

Under a system of flexible exchange rates, in the long run, a nation's balance on current account and capital account transactions will

• A) increase continuously.
• B) decrease continuously.
• C) tend to net out to zero, indicating a balance between the debits and credits.
• D) tend to increase if the nation is running a balance of trade surplus and decrease if it is running a balance of trade deficit.

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Definitions:

New World

A term used to describe the Western Hemisphere, particularly the Americas, discovered by European explorers during the Age of Discovery, contrasting with the Old World of Europe, Asia, and Africa.

Permanent European Settlement

The establishment of enduring communities in the Americas, Australia, and other parts of the world by European explorers and colonists starting in the late 15th century.

Southwest

A region in the United States generally considered to include Arizona, New Mexico, Texas, and parts of surrounding states, known for its desert landscape and cultural heritage.