Explain the difference between a balance of payments (BOP) deficit and surplus. If a country were on a pure floating exchange rate system, would it be possible for the country to have either a BOP deficit or surplus? Explain your answer.

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Joshua StredderLv10

29 Sep 2019

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Each circumstance requires an answer including the "why or why not":

Can a country have a:

a. current-account deficit, capital-account surplus, and flexible exchange rate? Why or why not?

b. current-account deficit, capital-account deficit, and flexible exchange rate? Why or why not?

c. merchandise trade deficit, capital-account deficit, and flexible exchange rate? Why or why not?

d. current-account surplus, capital-account surplus, and fixed exchange rate? Why or why not?

e. current-account surplus, capital-account surplus, official settlements balance surplus, and fixed exchange rate? Why or why not?

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Explain the difference between a balance of payments (BOP) deficit and surplus. If a country were on a pure floating exchange rate system, would it be possible for the country to have either a BOP deficit or surplus? Explain your answer.

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