If a Country Has a Flexible Exchange Rate System and a Deficit

question 20

Multiple Choice

If a country has a flexible exchange rate system and a deficit on capital account

• A)the balance of payments must be zero.
• B)The balance of payments must be positive.
• C)The balance on current account must be positive.
• D)The balance on current account must be negative.

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Definitions:

Expense Account

An accounting account that tracks money spent or costs incurred in a business entity's operation.

Perpetual Inventory System

An inventory management accounting method that instantly documents transactions of buying or selling inventory via computerized point-of-sale systems and enterprise asset management applications.

Merchandise Inventory

The total cost of all goods that are available for sale during a certain period, including purchases and adjustments for returns or damages.

Inventory On Hand

Refers to the total amount of items or products available in stock by a business at any given time.