Suppose that there is an increase in the supply of foreign exchange due to an inflow of foreign investment in a flexible-rate system. Explain how this would affect the balance on current account, being careful to explain any assumptions about the foreign exchange market that are critical to your discussion.

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The Answer of Suppose that there is an increase in the supply of foreign exchange due to an inflow of foreign investment in a flexible-rate system. Explain how this would affect the balance on current account, being careful to explain any assumptions about the foreign exchange market that are critical to your discussion.

Suppose That There Is an Increase in the Supply of Foreign