Question
When PNG was using the hard kina policy as its exchange rate policy, a balance of payment surplus would cause currency
A. appreciation
B. flow deficit
C. flow surplus
D. depreciation
Choose the correct one.
A. appreciation
B. flow deficit
C. flow surplus
D. depreciation
Choose the correct one.
Answers
GPT-4o mini
The correct answer is **A. appreciation**.
Under the hard kina policy, a balance of payments surplus indicates that there is an excess of foreign currency inflows compared to outflows. As a result, this increased demand for the kina would typically lead to its appreciation against other currencies.
Under the hard kina policy, a balance of payments surplus indicates that there is an excess of foreign currency inflows compared to outflows. As a result, this increased demand for the kina would typically lead to its appreciation against other currencies.