When It Is Reported That a Nation Is Experiencing a "Balance

question 102

Multiple Choice

When it is reported that a nation is experiencing a "balance of payments deficit," this is best interpreted to mean that the nation is experiencing

• A) an increase in foreign exchange reserves.
• B) a decrease in foreign exchange reserves.
• C) an imbalance between its current account and its capital and financial account.
• D) a situation where it is importing more goods than it is exporting.

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Definitions:

Coupon Bond

A type of bond that offers interest payments through coupons to the bondholder until its maturity, when the principal amount is reimbursed.

Accrued Interest

The interest that has accumulated on a bond since the last interest payment up to, but not including, the purchase (or sale) settlement date.

Interest Days

The number of days over which interest is calculated on a loan or financial instrument.

Coupon Bond

A type of bond that pays the holder interest at a fixed rate, typically semi-annually, until maturity when the face value is repaid.