Assume Gold Standard (fixed exchange rate system) and price adjustment mechanism of Balance of Payments. Choose the correct statement(s). At least one is correct.

Question

Assume Gold Standard (fixed exchange rate system) and price adjustment mechanism of Balance of Payments.  Choose the correct statement(s). At least one is correct.

Answer

Current account surplus in the domestic economy causes deflation in the domestic economy, which improves the competitiveness of domestic goods at world market

Answer

Current account surplus in the domestic economy causes deflation in the domestic economy, which reduces the competitiveness of domestic goods at world market

Answer

Current account surplus in the domestic economy causes inflation in the domestic economy, which reduces the competitiveness of domestic goods at world market

Answer

Current account surplus in the domestic economy causes inflation in the domestic economy, which improves the competitiveness of domestic goods at world market

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Assume Gold Standard (fixed exchange rate system) and price adjustment mechanism...

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