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In a System of Fixed Exchange Rates, the Automatic Balance-Of-Payments

Question 1

Multiple Choice

In a system of fixed exchange rates, the automatic balance-of-payments adjustment process for a country with a balance-of-payments deficit would theoretically involve, among other things, __________ in the interest rate and __________ in national income.


A) a decrease; a decrease
B) a decrease; an increase
C) an increase; a decrease
D) an increase; an increase

Correct Answer:

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