Suppose Canada and Switzerland were the only two countries in the world There exists an excess supply of Swiss francs on the foreign exchange market This suggests that ?
Correct answer: B. the Swiss current account balance is in deficit
- A. the Canadian current account balance is in surplus
- B. the Swiss current account balance is in deficit
- C. the Canadian current account balance is in equilibrium
- D. the Swiss current account balance is in equilibrium
Explanation
An excess supply of Swiss francs means Switzerland is selling more goods, services, or assets abroad than it is buying, consistent with a current-account deficit. With only two countries, the counterpart country has the corresponding surplus.
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