"For countries with fixed exchange rates, payments deficits would be self-correcting, if only governments would stop...

80.2K

Verified Solution

Question

Finance

"For countries with fixed exchange rates, payments deficitswould be self-correcting, if only governments would stop doingtheir darnedest to prevent correction." Comment, and include howcounterbalancing monetary policy (sterilization) can preventself-adjustment from occurring.

Answer & Explanation Solved by verified expert

3.6 Ratings (365 Votes)

In those situations in which there is a payment deficit the central bank of a country will come into picture and will intervene to control the payment deficit situation by buying domestic currency and by selling the foreign currency This will be done by the central bank so as to be See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

"For countries with fixed exchange rates, payments deficitswould be self-correcting, if only governments would stop doingtheir darnedest to prevent correction." Comment, and include howcounterbalancing monetary policy (sterilization) can preventself-adjustment from occurring.

"For countries with fixed exchange rates, payments deficits would be self-correcting, if only governments would stop...

80.2K

Verified Solution

Question

Finance

"For countries with fixed exchange rates, payments deficitswould be self-correcting, if only governments would stop doingtheir darnedest to prevent correction." Comment, and include howcounterbalancing monetary policy (sterilization) can preventself-adjustment from occurring.

Answer & Explanation Solved by verified expert

Get Answers to Unlimited Questions

Membership Benefits:

Transcribed Image Text

Other questions asked by students