Economics · Exchange Rate Dynamics
Under a flexible exchange rate regime, a persistent current account deficit, ceteris paribus, is most likely to:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Reduce capital inflows structurally
- 2Increase tariff protection automatically
- 3Lead to depreciation pressure on domestic currency✓
- 4Cause automatic appreciation of domestic currency
Correct answer
Lead to depreciation pressure on domestic currency
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