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Basic Question 4 of 6
If the U.S. runs a large current account deficit, global investors may reduce their holdings of U.S. dollar denominated assets and thus cause U.S. dollar to depreciate. This is the theory of:
B. The debt sustainability channel.
C. The portfolio balance channel.
A. The asset preference channel.
B. The debt sustainability channel.
C. The portfolio balance channel.
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
explain the potential effects of monetary and fiscal policy on exchange rates;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.