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Country U is known for its stable political environment and strong economic growth. It typically runs a surplus in its financial account due to high
Country U is known for its stable political environment and strong economic growth. It typically runs a surplus in its financial account due to high foreign direct investment (FDI) inflows. If Country U decides to liberalize its financial system, allowing for the free movement of capital, what is the most likely immediate impact? Question 20Answer a. A decrease in the current account surplus b. No impact, as financial liberalization does not affect the balance of payments c. A decrease in the financial account surplus d. An increase in the financial account surplusstion 19Answer a. Remove all trade barriers b. Decrease interest rates c. Increase the money supply d. Decrease the money supply
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