Under a System of Freely Flexible (Floating)exchange Rates an American

question 216

Multiple Choice

Under a system of freely flexible (floating) exchange rates an American trade deficit with Mexico will tend to cause

• A)the United States government to ration pesos to American importers.
• B)a flow of gold from the United States to Mexico.
• C)an increase in the peso price of dollars.
• D)an increase in the dollar price of pesos.

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