Which of the following would increase the current account of Country X? Country Y is Country X's sole trading partner.
A) Inflation increases in countries X and Y by comparable amounts.
B) Country X's and Country Y's currencies depreciate by the same amount.
C) Country X imposes tariffs on imports from Country Y, and Country Y retaliates by imposing an identical tax on X's exports.
D) The central banks of Country X and Country Y reduce the money supply to increase interest rates.
E) Country X imposes a quota on imports, and Country Y retaliates by imposing an identical quota on X's exports.
Correct Answer:
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