Q
Under a pegged exchange rate system which does not explain why a country would have a balance of payments deficit ?
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A
A. Very high rates of inflation occur domestically
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B
B. Foreigners discriminate against domestic products
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C
C. Technological advance is superior abroad
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D
D. The domestic currency is undervalued relative to other currencies
Correct Answer:
D. D. The domestic currency is undervalued relative to other currencies
