The following table shows the balance of payments statement of Transylvania for 2013.All the figures are in billions of dollars. Refer to the above data.In a flexible exchange-rate system, the balance of payments position of Transylvania would cause the international value of its currency to depreciate.

Question

The following table shows the balance of payments statement of Transylvania for 2013.All the figures are in billions of dollars.  Refer to the above data.In a flexible exchange-rate system, the balance of payments position of Transylvania would cause the international value of its currency to depreciate.

Quizplus · Accepted Answer

According to the balance of payments statement, Transylvania has a current account deficit, which implies that it is importing more than it is exporting. This would lead to a decreased demand for its currency, causing it to depreciate in a flexible exchange-rate system.

The Following Table Shows the Balance of Payments Statement of Transylvania