Will exchange rates correct a balance-of-trade deficit? Consider the case of a balance-of-trade deficit in the United States, along with a floating exchange rate. During a balance-of-trade deficit, net financial_______(Inflows/outflows) may be enough to offset net international trade flows, preventing the US dollar from________(Strengthening/weakening) and preventing exchange rate changes from_________(correcting/exaggerating) the problem.

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Economics

Question: How is this likely to affect economies that are heavily dependent on oil imports? a) Decrease in inflation b) Increase in their trade deficits c) Increase in their exports d) Decrease in their current account deficits

You have the following annual figures for the New Zealand economy.             Investment expenditure                      $42.5 billion            Government savings                           -$1.7 billion The current account balance is not zero.  In fact the current account deficit is $6.0 billion.  What is New Zealand's actual private sector savings figure?  $____billion (use 1 d.p.).

Question: "In a scenario where a country operates under a floating exchange rate system, what would likely be the effect of a significant increase in its central bank's interest rates on the country's current account balance? Assume other global economic conditions remain constant." a) The current account balance will improve due to increased foreign investment. b) The current account balance will deteriorate due to increased imports and decreased exports. c) The current account balance will improve due to decreased imports and increased exports. d) The change in interest rates will have no effect on the current account balance.

If domestic investment increases, and there is no change in the amount of private and public saving, what must happen to the size of the trade deficit?

What is ? 1-)Balance Of Payments 2-)Trade Deficit 3-)J-Curve Effect

Imagine that the U.S. economy finds itself in the following situation: a government budget deficit of $100 billion, total domestic savings of $1,500 billion, and total domestic physical capital investment of $1,600 billion. According to the national saving and investment identity, what will be the current account balance? What will be the current account balance if investment rises by $50 billion, while the budget deficit and national savings remain the same?

Q2-16 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. Select one: a. a decrease / a decrease b. a decrease / an increase c. an increase / an increase d. an increase / a decrease