Asked Apr 11, 2019

The current account responds to changes in:




the interest rate



the nominal exchange rate.



both the nominal and real exchange rates.



the real exchange rate.


Expert Answer

Step 1

Nominal exchange rate is just the relative prices of two currencies. It is governed by monetary policies of the countries in question and doesn't really affect trade balance/ cuurent account.

Real exchange rate, on the other hand, &n...

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