Advanced Questions

1:

A capital account surplus might be expected to cause a current account deficit because the associated

A.

capital outflow would cause the nation's currency to depreciate, contributing to a trade deficit

B.

capital inflow would cause the nation's currency to depreciate, contributing to a trade deficit

C.

capital inflow would cause the nation's currency to appreciate, contributing to a trade deficit

D.

capital outflow would cause the nation's currency to appreciate, contributing to a trade deficit

 

Answer : C

Explanation :

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Option: A

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