Post Utme Caleb University 2022 Economics Question 6

Practice objective / multiple choice question 6 from the 2022 Post Utme Caleb University Economics examination.

Post Utme Caleb University 2022 Economics Objective / Multiple Choice
Question 6 POST_UTME_CALEB_UNIVERSITY • 2022 • ECONOMICS • objective

Consider a small open economy with a fixed exchange rate. If the economy experiences an increase in aggregate demand, what will be the effect on the balance of payments?

Answer Options

A. The balance of payments will improve due to the increase in exports.
B. The balance of payments will worsen due to the increase in imports.
Correct Answer C. The balance of payments will remain unchanged as the exchange rate is fixed.
D. The balance of payments will improve due to the increase in foreign investment.
Correct Answer
C
Correct Option:
The balance of payments will remain unchanged as the exchange rate is fixed.

About This Question

This is Post Utme Caleb University 2022 Economics Question 6. It is one of the objective questions from the 2022 Post Utme Caleb University Economics examination.

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