CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

For a country that runs a large, persistent current account deficit, the debt sustainability channel says:
A. its external debt will become sustainable.
B. its currency should depreciate to help its external debt to be stabilized.
C. its currency should appreciate to help reduce its external debt.
Explanation: The external debt level will keep rising until it's unsustainable. The currency is expected to depreciate to reduce the current account deficit and keep the debt manageable.

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