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Social Science Clinic => Economics => Topic started by: elizabeth18 on May 25, 2020

Title: Under fixed exchange rates balance of payments problems will NOT be caused by
Post by: elizabeth18 on May 25, 2020

Question 1

The risk that a foreign country's government or central bank will make its policies less favourable for businesses is
◦ sovereign risk.
◦ political risk.
◦ exchange risk.
◦ a moral hazard problem.

Question 2

Under fixed exchange rates balance of payments problems will NOT be caused by
◦ faster growth.
◦ improvement in the terms of trade.
◦ higher inflation in this country than in other countries.
◦ the income elasticity of demand for imports being higher than the income elasticity of demand for exports.

Title: Under fixed exchange rates balance of payments problems will NOT be caused by
Post by: bbburns21 on May 25, 2020

Answer 1

sovereign risk.

Answer 2

improvement in the terms of trade.