The changes in the exports and imports of goods and services recorded in the current account of the balance of payments are determined by:
A) shifts in climatic conditions.
B) changes in nominal exchange rates alone.
C) changes in real exchange rates and income levels in different countries.
D) changes in relative price levels between countries.

Question

Quizplus · Accepted Answer

Changes in real exchange rates and income levels in different countries affect the competitiveness and demand for goods and services, influencing exports and imports in the current account.

The Changes in the Exports and Imports of Goods and Services