Suppose there are two countries, B and C, that have no trade and no financial transac- tions with any countries except cach other. B imports a total of goods worth 10 million bollars from C, where a bollar is a unit of B's currency. B has no exports. Which of the following must be true?

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Chapter1: Making Economics Decisions
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Please answer the multiple choice given in the image below. Provide a reasonable explanation for the answer.

25. Suppose there are two countries, B and C, that have no trade and no financial transac-
tions with any countries except each other. B imports a total of goods worth 10 million
bollars from C, where a bollar is a unit of B's currency. B has no exports. Which of
the following must be true?
A. B has a capital account deficit
B. C has a current account deficit
C. C is buying assets from B.
D. The exchange rate of collars per bollar is bigger than 1, where a collar is a unit
of C's currency.
Transcribed Image Text:25. Suppose there are two countries, B and C, that have no trade and no financial transac- tions with any countries except each other. B imports a total of goods worth 10 million bollars from C, where a bollar is a unit of B's currency. B has no exports. Which of the following must be true? A. B has a capital account deficit B. C has a current account deficit C. C is buying assets from B. D. The exchange rate of collars per bollar is bigger than 1, where a collar is a unit of C's currency.
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