When a Nation's Currency Is Different from Equilibrium, It Is

question 131

Multiple Choice

When a nation's currency is different from equilibrium, it is either overvalued or undervalued. To restore equilibrium, either a ____ or ____ must occur.

• A) return to a balanced budget; more government belt-tightening
• B) nominal exchange rate change; a change in the nation's price level
• C) national cut of imports; a national increase of exports
• D) national cut of exports; a national increase of imports