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Author Question: Assume that there is a balance of payments deficit caused by a high rate of domestic inflation. ... (Read 162 times)

scienceeasy

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Question 1

Define the current account of the balance of payments.

Question 2

Assume that there is a balance of payments deficit caused by a high rate of domestic inflation. (Choose correct answer in each case.)
a) What effect will a deflationary monetary policy (a reduction in money supply) have on interest rates?
Raise/Lower them.
b) What effect will this have on the financial account?
Cause an inflow/outflow of finance
c) What effect will this have on the money supply?
Increase it/Reduce it
d) What effect will this have on inflation?
Help to reduce it/increase it
e) What effect will a deflationary fiscal policy have on interest rates?
Raise/Lower them
f) What effect will this have on the capital account?
Cause an inflow/outflow of capital
g) What effect will this have on the money supply?
Increase/Reduce it
h) What effect will this have on inflation?
Help to reduce it/increase it
i) Which will be more effective under fixed exchange rates: fiscal or monetary policy?
Fiscal/Monetary


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Marked as best answer by scienceeasy on May 25, 2020

Dnite

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scienceeasy

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Reply 2 on: May 25, 2020
Excellent


aliotak

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Reply 3 on: Yesterday
Gracias!

 

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