Which of the Following Statements Is True of a Country

question 50

Multiple Choice

Which of the following statements is true of a country that has a gold standard exchange Rate system?

• A)A country running a surplus in its balance of payment would experience an outflow of gold which would force it to increase the price of gold.
• B)A country running a surplus in its balance of payment would experience an outflow of gold which would force it to decrease the price of gold.
• C)A country running a surplus in its balance of payment would experience an outflow of gold which would force it to reduce its money supply.
• D)A country running a surplus in its balance of payment would experience an outflow of gold which would force it to increase its money supply.

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Definitions:

Discount Rate

The interest rate used to determine the present value of future cash flows, reflecting the time value of money and risk of cash flows.

Annuity

A financial instrument that provides a steady flow of payments to a person, often employed as a source of income for those in retirement.

Present Value

The present-day valuation of a money amount expected in the future or series of cash inflows, factoring in a specific return rate.

Interest Rate

The percentage charged on the total amount you borrow or save, often annually.