Which of the following is not a necessary condition for a flat BP curve?
A)perfect capital mobility
B)perfect asset substitutability
C)fixed exchange rates
D)floating exchanges rates
E)Both C and D

Question

Quizplus · Accepted Answer

A flat BP (balance of payments) curve implies perfect capital mobility and perfect asset substitutability, but it does not depend on the exchange rate regime being fixed or floating. Therefore, both fixed and floating exchange rates are not necessary conditions for a flat BP curve, making E the correct choice.

Which of the Following Is Not a Necessary Condition for a Flat