The ________ Approach Argues That Equilibrium Exchange Rates Are Achieved

question 38

Multiple Choice

The ________ approach argues that equilibrium exchange rates are achieved when the net inflow of foreign exchange arising from current account activities is equal to the net outflow of foreign exchange arising from financial account activities.

• A) balance of payments
• B) monetary
• C) asset market
• D) law of one price

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Definitions:

Open Account Agreement

A payment term arrangement between sellers and buyers where goods are shipped and delivered before payment is due.

Least Safe

Describes items or situations that are considered to have the highest level of risk or danger compared to others.

Unfavorable Balance

A financial situation where expenses or payments are greater than earnings, income, or cash inflows, often relating to trade deficits.

Syndicate

A group of banks that work together to offer credit in order to reduce risk.