When a country has flexible exchange rates the:
a. Reserves account must equal zero.
b. Reserves account must be positive.
c. Reserves account must be negative.
d. Current account must equal minus the reserves account.
e. Reserves account can be positive or negative.
Question 2
Which of the following is a major reason for offshoring?
a. Advances in information and communication technologies.
b. The inability of companies to fragment production processes.
c. The gradual decline in worldwide competition.
d. All of the above are major reasons for offshoring.
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Flexible exchange rates are supposed to prevent long-term trade deficits.