Severe Fiscal Imbalances Can Directly Trigger a Currency Crisis Since

question 18

Multiple Choice

Severe fiscal imbalances can directly trigger a currency crisis since

• A)investors fear that the government may not be able to pay back the debt and so begin to sell domestic currency.
• B)the government may stop printing money.
• C)the government may have to cut back on spending.
• D)the currency must surely increase in value.

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Definitions:

Investing Activity

This refers to transactions involving the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Statement of Cash Flows

A financial report detailing the impact of alterations in balance sheet figures and income on cash and cash equivalents, dividing the cash flows into categories of operating, investing, and financing activities.

Operating Activities

Transactions and events associated with the primary operations of a business, such as sales and service provision, reflected in its cash flow.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate the cash from operating activities.