Many developing countries face a balance of payments constraint because:
A)they hold too many international reserves.
B)they hold too few international reserves.
C)the IMF forces them to adopt policies that are counterproductive.
D)they fail to implement exchange rate policy correctly.

Question

Quizplus · Accepted Answer

Holding too few international reserves can lead to a balance of payments constraint for developing countries, as it limits their ability to manage currency fluctuations and finance imports, potentially leading to economic instability.

Many Developing Countries Face a Balance of Payments Constraint Because