The Purchase of a Capital Asset Adds to the Demand

question 171

True/False

The purchase of a capital asset adds to the demand for loanable funds only if that asset is a domestic one.

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Definitions:

Net Monetary Assets

The difference between monetary assets and monetary liabilities, used to assess liquidity position.

Exchange Gain

The profit realized from the sale of securities or foreign exchange transactions when the exchange rate moves in a favorable direction.

Functional Currency

The primary currency used by a business or unit in its financial transactions, reflecting the economic environment in which it primarily operates.

Foreign Subsidiary

A company that is owned or controlled by another company (parent company) and is located in a different country.