An economic condition in which a trade deficit causes a permanent negative shift in a country's balance of payments is called ________.
A) revaluation
B) statistical discrepancy
C) the Fisher effect
D) fundamental disequilibrium

Question

Quizplus · Accepted Answer

Fundamental disequilibrium refers to a situation where a country's trade deficit has become so large that it causes a shift in the country's balance of payments that cannot be corrected through normal market mechanisms. This can lead to a long-term decline in the country's currency, as well as other economic problems. Revaluation refers to a change in the value of a currency relative to other currencies, while the Fisher effect refers to the relationship between inflation and interest rates. A statistical discrepancy refers to a discrepancy between two different measures of economic activity.

An Economic Condition in Which a Trade Deficit Causes a Permanent