Which of the Following Is Not a Disadvantage of Controls

question 70

Multiple Choice

Which of the following is not a disadvantage of controls on capital outflows?

• A) The controls may lead to excessive risk taking by the domestic banks.
• B) They are seldom effective during a crisis.
• C) Capital flight may increase after they are put in place.
• D) Controls often lead to an increase in government corruption.

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Definitions:

Financial Asset

An intangible asset deriving value due to a contractual claim, such as cash, stock, bonds, and bank deposits.

Objective Evidence

Objective evidence refers to information, facts, or data that can be quantifiably measured or verified, uninfluenced by feelings, interpretations, or bias.

Impaired

Refers to a reduction in the recoverable value of an asset below its carrying amount on the balance sheet, indicating a loss in value that must be accounted for.

Bankruptcy

A legal process where individuals or entities declare their inability to pay back their creditors, leading to asset liquidation or reorganization under the law.