Question

If a nation has a balance of payments deficit and exchange rates are flexible, the price or value of that nation's currency in the foreign exchange markets will rise. true or false

Answer 1

False

Step-by-step explanation:

A nation's currency strength is dependent on how much it's goods are in demand. If there is high demand for a countrie's goods it also follows that there will be high demand for its currency so it will be stronger.

When there is a balance of payment deficit a country is importing more and borrowing from other countries to buy imports. So it's currency will weaken.