Question

The ________ approach argues that equilibrium exchange rates are achieved when the net inflow of foreign exchange arising from current account activities is equal to the net outflow of foreign exchange arising from financial account activities.

A) balance of payments
B) monetary
C) asset market
D) law of one price

Answer 1

Answer:

A

Explanation:

Correct option for the question is A (balance of payment) because balance of payments depicts that the country saves enough from its revenues so that it can pay for its imports. Basically it is record for all transactions performed internationally.