Practice - Relationship Between BOP and Exchange Rates
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Practice Questions
Test your understanding with targeted questions
What does a current account deficit indicate?
💡 Hint: Think about what happens when a country buys more from other countries.
What happens to a currency if a country has a surplus?
💡 Hint: Consider the relationship between money coming into the country and currency value.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What happens to a currency when there is a current account deficit?
💡 Hint: Consider how trade impacts currency value.
A surplus in the balance of payments usually results in currency appreciation. True or False?
💡 Hint: Think about the flow of money and economic health.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A country has a consistent current account deficit of $10 billion. Discuss the potential long-term effects on its economy and propose a policy response.
💡 Hint: Consider both immediate economic effects and long-term consequences.
Analyze a scenario where a country has a surplus of $5 billion in its current account for five consecutive years. What impact might this have on its long-term exchange rate and international relations?
💡 Hint: Look at historical examples where surpluses led to international tension.
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