Consider That Britain Is Trying to Maintain a Fixed Exchange

question 24

Multiple Choice

Consider that Britain is trying to maintain a fixed exchange rate with respect to the U.S. dollar. However, the present situation in the foreign exchange market is conducive for the British pound to depreciate with respect to the U.S. dollar. If the British government uses sterilized intervention in the foreign exchange market, then:

• A)Britain is gaining official international reserves.
• B)Britain will be running a surplus.
• C)the British monetary authorities will be selling British government bonds.
• D)the British monetary authorities will be buying British government bonds.

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Definitions:

Credit Sales

Sales transactions where the customer is allowed to pay at a later date, extending credit rather than requiring payment upfront.

Budgeted Accounts Receivable

The projected amount of money owed to a company by its customers for goods or services delivered or used but not yet paid for.

Collections

Refers to the process or activity of gathering or receiving payments from customers, typically relating to accounts receivable.

Cash Budget

A budget that estimates cash inflows and outflows over a specific period, used to assess whether a company has sufficient cash to meet its obligations.