In a Freely Floating Exchange Rate System,if the Capital Account

question 13

Multiple Choice

In a freely floating exchange rate system,if the capital account is running a deficit

• A) the balance of payments must run a deficit.
• B) the balance of payments must be zero.
• C) the current account must run a surplus.
• D) both B and C.

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Definitions:

Beer

A fermented beverage made from barley, hops, water, and yeast, commonly consumed worldwide.

Blood

A fluid, circulating connective tissue that transports nutrients and other materials through the bodies of many types of animals.

Bleach

A chemical compound used to whiten or remove color through oxidation or reduction, often used for disinfection and stain removal.

Seawater

Water from the sea, which is saline in nature due to the presence of dissolved salts, minerals, and other substances.