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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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You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
explain how flows in the balance of payment accounts affect currency exchange rates;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.