When PNG was using the hard kina policy as its exchange rate policy, a balance of payment surplus would cause currency

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.

GPT-4o mini · Answer

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.