Exchange rate determined in freely floating rate system

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1. Can there be a deficit on Current Account and a deficit on Capital Account at the same time? Explain.

2. Explain why currency depreciation leads to an improvement in a nation's balance of trade.

3. How is the exchange rate determined in a freely floating rate system?

4. Foreigners are buying up hundreds of billions of dollars a year in American assets. In what ways should this be a matter of concern to Americans?

Reference no: EM13898438

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