The International Economy And Globalization
PPSCFPSCNTSPakistan govt jobs
- Subject
- The International Economy And Globalizationeconomics-mcqs › the-international-economy-and-globalization
- Published
- 27 May 2019
- Last updated
- 28 May 2026
Browse all The International Economy And Globalization MCQs →
In a floating exchange rate system, what is the likely effect on the currency's value if there is a balance of payments deficit?
Multiple choice question for The International Economy And Globalization. Select an option, then review the explanation below.
Explanation
When a country experiences a balance of payments deficit under a floating exchange rate regime, the demand for its currency tends to drop, causing its external value to decline. This is because more currency is being sold to finance the deficit, leading to depreciation.
More The International Economy And Globalization MCQs
Practice related questions from the same subject.
- 1.In which type of goods do Less Developed Countries (LDCs) typically hold a comparative advantage?
- 2.Why did output decline drastically in the economies undergoing transition?
- 3.When products are sold abroad at prices below the marginal cost of production and the marginal benefit to local consumers, which policy is most likely supporting this situation?
- 4.How do tariffs affect the production levels of domestic companies and the consumption habits of consumers?
- 5.The equilibrium exchange rate adjusts to neutralize disparities in which of the following international economic factors?