Question

If most major economies are operating under a regime of fixed exchange rates, then a ________...

If most major economies are operating under a regime of fixed exchange rates, then a ________ in a country's balance of payments suggests that the country should ________ its currency.

surplus; revalue
surplus; devalue
deficit; revalue
All of these

Homework Answers

Answer #1

IF major economies are working under fixed exchange rate, then a "Surplus" in a country's balance of payment suggests that the country should "Revalue" its currency.  

A surplus means the nation has more incoming currency than the outgoing currency in such a scenario under a flexible rate country's will see there currency appreciating to the point where the surplus is eliminated. COuntry under the fixed rates should follow the same path.  

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