The Buying and Selling of Foreign Currency by the Central

question 107

Multiple Choice

The buying and selling of foreign currency by the central bank is a trade policy whose objective is:

• A)stabilizing the exchange rate against external shocks.
• B)stabilizing the interest rate against foreign capital outflows.
• C)promoting long term economic growth.
• D)reducing purchases of assets abroad.

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Definitions:

Seller's Risk

The risk borne by the seller of goods until the ownership is transferred to the buyer, typically under specified delivery terms.

Exported Goods

Items that are sent from one country to another for the purpose of trade or sale.

Sovereign Immunity

The legal doctrine that prevents the government or its subdivisions, departments, and agencies from being sued without its consent.

Foreign Sovereign Immunities Act

A U.S. law that limits the circumstances under which a foreign sovereign nation (its political subdivisions, agencies, and instrumentalities) can be sued in U.S. courts.