When a Central Bank Buys Foreign Assets

question 15

Multiple Choice

When a central bank buys foreign assets,

• A)its holdings of foreign assets rise by the amount of the purchase, but the monetary base is unaffected.
• B)its holdings of foreign assets and the monetary base rise by the amount of the purchase.
• C)its holdings of foreign assets rise by the amount of the purchase, and the monetary base rises by the amount of the purchase times the money multiplier.
• D)the monetary base falls by the amount of the purchase.

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Definitions:

Somatoform Disorders

A group of psychological disorders in which patients experience physical symptoms that have no identifiable physical cause, believed to be linked to psychological factors.

Schizophrenia

A chronic mental disorder characterized by delusions, hallucinations, disorganized speech, and a loss of contact with reality.

Perfectionism

A personality trait characterized by a person's striving for flawlessness and setting excessively high performance standards.

Rumination

The compulsive focused attention on the symptoms of one's distress, and on its possible causes and consequences, as opposed to its solutions.