Exchange Rates and the Balance of Payments (id: 32ae70923)

本题目来源于试卷: Exchange Rates and the Balance of Payments，类别为 IB经济学

[单选题]
Select which of the folio6eo 0nj pp33lowinferj .w4oh8*rg would not be consistent with a trade deficit:

A. Net demand for foreign currency that drives the domestic currency to depreciate in the foreign exchange market.
B. Net demand for foreign currencies will cause foreign currencies to appreciate in the foreign exchange market.
C. Quantity demanded of foreign currency is greater than the quantity supplied of foreign currency.
D. Net supply of domestic currency that causes the domestic currency to appreciate in the foreign exchange market.


参考答案:  A


本题详细解析:

D

$\underset{‾}{\text{Explanation}}$:  D is the correct choice because, in a trade deficit, the quantity supplied of domestic currency to buy imports exceeds the quantity demanded of domestic currency to buy exports.

The supply curve for the domestic currency shifts right as a result (S${}_1$ to S${}_2$) and the currency depreciates (xr${}_1$ to xr${}_2$).

A, B, and C are consistent with trade deficits. Since exports are less than imports, the demand for foreign currency is greater than the supply of foreign currency (Choice C) driving foreign currency appreciation (Choices B $\mathrm{\&}$ C) or domestic currency depreciation (Choice A).

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