According to the theory of international trade and balance of payments, a surplus or deficit in a country's basic balance should be:
A)always weighted toward the deficit side.
B)always weighted toward the surplus side.
C)self-correcting.
D)continually out of balance.
E)only brought into balance by government tariff action.

Question

Quizplus · Accepted Answer

The theory of international trade and balance of payments suggests that imbalances (surplus or deficit) in a country's basic balance should be self-correcting over time through mechanisms such as exchange rate adjustments, changes in domestic economic activity, and price level changes.

According to the Theory of International Trade and Balance of Payments