A country with a balance of payments deficit that wants to maintain the current exchange rate:
A. loses foreign assets.
B. gains official reserves.
C. loses official reserves.
D. gains foreign liabilities.
Answer: C
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Suppose an appreciation of the French franc causes U.S. prices of French wine imports to rise sharply. On the other hand, Californian wine becomes relatively inexpensive to French consumers. Other things equal, this will result in:
a. an increase in U.S. aggregate expenditures and an increase in the aggregate quantity of U.S. goods and services demanded. b. a decrease in U.S. aggregate expenditures and a decrease in the aggregate quantity of U.S. goods and services demanded. c. an increase in U.S. aggregate expenditures and a decrease in the aggregate quantity of U.S. goods and services demanded. d. no change in either U.S. aggregate expenditures or the aggregate quantity of U.S. goods and services demanded. e. a decrease in U.S. aggregate expenditures and an increase in the aggregate quantity of U.S. goods and services demanded.
The Fed's purchases and sales of government securities are called: a. margin operations
b. open market operations. c. small-dealer transactions. d. intermediary transactions.
A tax levied on imported goods is called a(n) a. excise tax
b. quota. c. foreign profits tax. d. tariff.