Please state why it’s wrong or uncertain if applicable True or False or uncertaintyfor-omaticallyprice of imported goods relative to localgoods.on-igher deposiratesand make internatiolower loan rates.13. If the balance on current account is positive (a surplus), adjustment ofthe balance to zero would usually require the real exchange rate to rise.14. With flexible exchange rates, central banks do not have to finance cur-rent account deficits because balance of payments equilibrium is re-stored by changes in exchange rates.15. Canada should move to a common currency with the United States onceit has much the same inflation rate as the United States.16. The variability of real exchange rates has been much greater when acountry adopts of fixed exchange rates (as under the Bretton-Woodssystem) than when it floats its nominal exchange rate.

Answered: 13. If the balance on current account…

13. If the balance on current account is positive (a surplus), adjustment of the balance to zero would usually require the real exchange rate to rise.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Please state why it’s wrong or uncertain if applicable

True or False or uncertainty
for-
omatically
price of imported goods relative to local
goods.
on-
igher deposirates
and make internatio
lower loan rates.
13. If the balance on current account is positive (a surplus), adjustment of
the balance to zero would usually require the real exchange rate to rise.
14. With flexible exchange rates, central banks do not have to finance cur-
rent account deficits because balance of payments equilibrium is re-
stored by changes in exchange rates.
15. Canada should move to a common currency with the United States once
it has much the same inflation rate as the United States.
16. The variability of real exchange rates has been much greater when a
country adopts of fixed exchange rates (as under the Bretton-Woods
system) than when it floats its nominal exchange rate.

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