When Canadians or Foreigners Expect the Return on ________ Assets

question 76

Multiple Choice

When Canadians or foreigners expect the return on ________ assets to be high relative to the return on ________ assets, there is a ________ demand for dollar assets, everything else held constant.

• A) dollar; foreign; constant
• B) dollar; foreign; higher
• C) foreign; dollar; higher
• D) foreign; dollar; constant

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Definitions:

Board of Governors

A governing body that oversees the operation and management of an organization, institution, or entity, like the Federal Reserve in the United States.

Deposit Insurance

A guarantee by a government or agency to cover deposits in the event of a bank failure, up to a certain amount.

Reserve Requirement

The reserve requirement is a central bank regulation that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves rather than lending out.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from the central bank's discount window.