If There Are No Transactions in the Official Financing Account

question 99

Multiple Choice

If there are no transactions in the official financing account, it is likely that

• A)this country has a pegged exchange rate and persistent surpluses on its balance of payments.
• B)the central bank has pegged the exchange rate so that the current and capital accounts sum to zero.
• C)the exchange rate is being determined freely in the foreign- exchange market.
• D)there must be a disequilibrium in the foreign- exchange market.
• E)this country must not be engaging in international trade.

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Definitions:

Agent

An individual or entity authorized to act on behalf of another (known as the principal) in dealings with third parties, creating a legal relationship called agency.

Authority

The power or right to give orders, make decisions, and enforce obedience, or a person or organization having such power.

Contract

A legal agreement between two or more parties that creates mutual obligations enforceable by law.

Liable

Legally responsible or obligated to someone or something, often used in the context of legal judgments or debts.