By external balance, most economists mean
A) avoiding excessive imbalances in international payments.
B) balance between exports and imports.
C) balance between the trade and service accounts.
D) what amounts to fixed exchange rates.
E) imbalance in internal transactions.

Question

Quizplus · Accepted Answer

External balance refers to avoiding excessive imbalances in international payments, which includes a balance between exports and imports as well as the trade and service accounts. It is important for maintaining healthy economic relations and stability in the global market. Fixed exchange rates are one potential mechanism for achieving external balance, but they are not synonymous with external balance itself. Imbalance in internal transactions is not relevant to external balance.

By External Balance, Most Economists Mean