A Country Facing a Balance of Payments Deficit Will Change

question 112

True/False

A country facing a balance of payments deficit will change the pegged value of its currency; this is called a revaluation.

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Definitions:

Cash Equivalent

Short-term, highly liquid investment assets that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

Money Market

A segment of the financial market where short-term funds are borrowed and lent, typically involving instruments with high liquidity and short maturities.

Treasury Bill

A short-term government security issued at a discount from the face value and paying no interest, maturing usually in one year or less.

Fraud Triangle

A model that describes the three elements present when an individual commits fraud: opportunity, pressure, and rationalization.