If exchange rates are flexible, capital is perfectly mobile, and central banks do not intervene in foreign exchange markets, then
A) balance-of-payments deficits of debtor nations will tend to worsen
B) any current account deficit must be financed by the outflow of capital
C) each nation's balance of payments will be zero
D) there is a strong link between the balance of payment and the domestic money supply
E) none of the above
Correct Answer:
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