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

Transylvania has a current account deficit of $25 billion, meaning that it is importing more than it is exporting. This will lead to a decrease in demand for its currency and cause it to depreciate in a flexible exchange-rate system.

The Following Table Shows the Balance of Payments Statement of Transylvania