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Qns: (a) A country should always try to maintain a balance of payments (BoP) surplus and avoid a balance of payment deficit. Do you agree?

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(a) A country should always try to maintain a balance of payments (BoP) surplus and avoid a balance of payment deficit. Do you agree? Illustrate with a country having BoP surplus and another country having BoP deficit of your choice. (20 marks)

(b) Explain with an exchange rate diagram the effects on the exchange rate if the economic growth and price level of the United States increased greater than Singapore. (20 marks)

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