A Decision by Foreign Central Banks to Sell Their Holdings

question 190

Multiple Choice

A decision by foreign central banks to sell their holdings of Canadian bonds will

• A)lower bond prices and interest rates in Canada.
• B)increase bond prices and interest rates in Canada.
• C)increase bond prices and lower interest rates in Canada.
• D)lower bond prices and increase interest rates in Canada.

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Definitions:

Capital Income

This term refers to the total amount of money generated from investments, dividends, interest, and any other sources other than labor earnings.

Rent

A regular payment made for the use of land, property, or equipment.

Opportunity Cost

The skipping of feasible improvements from various alternatives due to settling on one.

Own Savings

The portion of personal or household income that is not spent on consumption but is kept aside for future use, investments, or emergencies.