Ask Question
BusinessBusiness
16 June, 20:27

In a freely floating exchange rate system, if the current account is running a deficit, what are the consequences for the nation's balance on financial account and its overall balance of payments?

+5
Answers (1)
  1. 16 June, 20:45
    0
    If the current account is running in as deficit, the capital account must be running in a surplus equal to the same amount and thus the overall balance of the payments is same as before.

    Explanation:

    In a freely floating exchange rate system, the nation's balance of payments must always be zero.

    So if the current account is running in as deficit, the capital account must be running in a surplus equal to the same amount and thus the overall balance of the payments is same as before.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “In a freely floating exchange rate system, if the current account is running a deficit, what are the consequences for the nation's balance ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
True or false: By increasing RAM, a computer's CPU can process more quickly.
Answers (1)
Monique and zhong worked at the same company for five years without knowing much about each other. one day, at a company party, they began talking and really hit it off. they have been dating ever since.
Answers (1)
For whom would a car loan be better option than a lease
Answers (1)
Intramodel competition is: a. the joint use of trucks and railroads to serve common customers b. trucking companies underbidding other modes to secure business c. various modes seeking to gain market share from other modes d.
Answers (1)
Lorna just finished compiling her company's income statement for the month ended March 31. Her next step in preparing the company's financial statements should be to A : subtract the company's net income for March from the company's retained
Answers (1)
New Questions in Business
If you were using a simple exponential smoothing forecast model (alpha value equal to 0.30) that generated a forecast of 25.
Answers (1)
McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 12,000 units of this part are as follows: 36) Direct materials Direct labor Variable factory overhead Fixed
Answers (1)
The basic financial statements include all of the following except: Select one: a. Management's Discussion & Analysis b. Fund-basis financial statements c. Notes to the financial statements d. Government-wide statements e.
Answers (1)
The whole idea behind mass production was to: a. produce goods of the highest possible quality. b. give producers the maximum flexibility to respond to customer preferences. c. make large quantities of a limited variety of products at very low cost.
Answers (1)
Provenzano Corporation manufactures two products: Product B56Z and Product D32N. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools.
Answers (1)
Home » Business » In a freely floating exchange rate system, if the current account is running a deficit, what are the consequences for the nation's balance on financial account and its overall balance of payments?
Sign Up Forgot Password?