When the Nation's FX Reserves Are Rising, Some Would Call

question 131

Multiple Choice

When the nation's FX reserves are rising, some would call it a "balance of payments surplus." This could happen as a result of any of the following except

• A) the nation giving up assets to other nations.
• B) the nation sending more products abroad than it brought in.
• C) the economy becoming tremendously fortunate and strong.
• D) other nations investing more in this nation than this nation is investing in others.

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Definitions:

Risk-Free Rate

The theoretical return on an investment with no risk of financial loss, often represented by the yield on government securities.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Capital

The financial assets or resources that individuals or companies use to fund their operations and invest in their businesses.

Financial Situation

An individual's or organization's current status in terms of income, expenses, assets, and liabilities, impacting their ability to generate cash flow and meet financial obligations.