According to the monetary approach to the balance of payments,a deficit in the nation's balance of payments results from:
A)an excess in the nation's stock of money supply that is not eliminated or corrected by the nation's monetary authorities
B)an excess in the stock of money demanded in the nation that is not satisfied by domestic monetary authorities
C)an excess in the stock of money demanded in the other nation that is not satisfied by the other nation's monetary authorities
D)an excess of imports over exports in the nation

Question

Quizplus · Accepted Answer

The monetary approach to balance of payments emphasizes that a country's balance of payments is influenced by the nation's money supply. A deficit in the balance of payments occurs when the nation's stock of money supply is in excess and not corrected by the nation's monetary authorities. This excess money supply leads to higher demand for foreign goods and services, resulting in imports exceeding exports and leading to a deficit in the balance of payments.

According to the Monetary Approach to the Balance of Payments,a