A country's balance of payments can be affected by changes in

Question

Quizplus · Accepted Answer

All of the above factors can affect a country's balance of payments. Domestic income and foreign income impact the demand and supply of goods and services, which can affect export and import levels. The real exchange rate affects export competitiveness and import prices. The differential between domestic and foreign interest rates affects capital flows and exchange rates. Therefore, option E is the best choice as it encompasses all relevant factors.

A Country's Balance of Payments Can Be Affected by Changes