Sterilization Refers to Actions Taken by Central Banks

question 27

Multiple Choice

Sterilization refers to actions taken by central banks

• A) to neutralize the effects of balance of payments disequilibria on the money supply.
• B) to increase gold inflows when there is a balance of payments surplus.
• C) to decrease gold outflows when there is a balance of payments surplus.
• D) to cause the exchange rate to appreciate or depreciate.

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Definitions:

Private Corporation

A privately-owned company where ownership is either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock (shares) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately.

Authorized Shares

The total number of shares that a corporation is legally allowed to issue, as specified in its articles of incorporation.

Subscribed

Term used to describe the commitment by investors or customers to purchase or subscribe to a company's stocks, services, or publications.

Preemptive Right

The right of existing shareholders to purchase additional shares of new stock before it is offered to the public to maintain their proportional ownership in the company.