A) demand as well as supply of the domestic currency are the highest
B) demand for the domestic currency is equal to its supply
C) demand for the domestic currency is the highest
D) demand for the domestic currency is the lowest
Correct Answer: B
Solution :
When the balance of payments (BOP) of a country is in equilibrium, the surplus or deficit is eliminated from the BOP. When the BOP of a country is in equilibrium, the demand for domestic currency is equal to its supply. The demand and supply situation is thus neither favourable nor unfavourable.
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