Question 1

Multiple possible answer

A rise in import spending would, other things being equal,

- reduce an existing current account deficit

- decrease the capital and financial accounts - increase the capital and financial accounts

- increase an existing Balance of trade deficit.

Question 2

One possible answer

Which of the following are limits of a weak home currency solution for a given country?

- All the proposals are correct

- Transactions with MNCs subsidiaries

- Difficulties to solve simultaneously all deficits with foreign countries -The competition from foreign companies

-The J-curve effect