Under the price-specie-flow mechanism,what happens when,say,Germany's current account surplus is greater than its non-reserve capital account deficits?
A)German loans will finance all foreign net imports.
B)Automatic drop in German domestic prices and rise in foreign prices.
C)Gold reserves will flow into Germany.
D)Gold reserves will flow out of Germany.
E)Germany will experience a deficit.

Question

Quizplus · Accepted Answer

When Germany has a current account surplus greater than its non-reserve capital account deficits, gold reserves will flow into Germany, as the surplus leads to an inflow of gold under the price-specie-flow mechanism.

Under the Price-Specie-Flow Mechanism,what Happens When,say,Germany's Current Account Surplus Is