When equilibrium is present in the foreign exchange market, which of the following will tend to be in balance?
A) the value of goods exported and the value of goods imported
B) real and nominal interest rates
C) imports plus capital outflow and exports plus capital inflow
D) tax revenues and government expenditures

Question

Quizplus · Accepted Answer

When equilibrium is present in the foreign exchange market, the balance of payments will tend to be in balance. In order for this to happen, imports plus capital outflow must equal exports plus capital inflow. Therefore, choice C is the correct answer. The other options listed are not directly related to foreign exchange market equilibrium.

When Equilibrium Is Present in the Foreign Exchange Market, Which