The Financing of U.S. Import Transactions, Ceteris Paribus

question 268

Multiple Choice

The financing of U.S. import transactions, ceteris paribus

• A) reduces U.S. interest rates.
• B) increases the amount of foreign currency held by the Fed.
• C) increases U.S. GDP.
• D) decreases the amount of foreign currency held by U.S. banks.

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Definitions:

Petty Cash Account

A small amount of cash on hand used for paying expenses too small to merit writing a check.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Money Market Accounts

Interest-bearing accounts offered by financial institutions, combining the benefits of both savings and checking accounts, typically with higher interest rates.

Commercial Paper

An unsecured, short-term debt instrument issued by companies to finance their operational expenses.