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Assume Your Country Has a Balance of Payments Surplus

question 44

Essay

Assume your country has a balance of payments surplus. How would the government and markets react to "correct" this imbalance under a fixed exchange rate regime? Under a floating exchange rate regime?


Definitions:

Tetrapods

A superclass of animals characterized by four limbs (or the descent from such), including amphibians, reptiles, birds, and mammals.

Extant Species

Refers to species that are currently living and have not gone extinct.

Eusthenopteron

An extinct genus of lobe-finned fish, considered an important precursor to early tetrapods and amphibians.

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