The More Elastic Is a Nation's Demand and Supply of Foreign

question 22

Multiple Choice

The more elastic is a nation's demand and supply of foreign exchange the:

• A) larger is the devaluation or depreciation required to correct a deficit of a given size in the nation's balance of payments
• B) smaller is the devaluation or depreciation required to correct a deficit of a given size in the nation's balance of payments
• C) less feasible is a flexible exchange rate system
• D) less feasible is devaluation as a policy to correct a deficit in the nation's balance of payments

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