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The balance of payments of a country is in equilibrium when the
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- demand, as well as the supply of the domestic currency, are the highest
- demand for the domestic currency is equal to its supply
- demand for the domestic currency is the highest
- demand for the domestic currency is the lowest
Correct Option: B
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.
