Which of the following is one of the forces that determine the equilibrium between the current account and the real exchange rate?

Question

Quizplus · Accepted Answer

Movements in net foreign assets, such as changes in foreign investment or borrowing, are one of the key forces that can impact the equilibrium between the current account and real exchange rate. Changes in inventories and the balance of trade deficit can also impact the real exchange rate, but they are not specifically mentioned as key forces that determine the equilibrium. The net change in the merchandise account is essentially the same as the balance of trade, so it is not a separate option.

Which of the Following Is One of the Forces That