Which of the Following Is a Reason Why Governments Limit

question 65

Multiple Choice

Which of the following is a reason why governments limit convertibility of their currency?

• A)To encourage foreign investments
• B)To control currency appreciation
• C)To encourage capital flight
• D)To preserve their foreign exchange reserves
• E)To promote neo-mercantilism

---

Definitions:

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.

Investor Aversion

A reluctance or aversion among investors to take on risky investments, preferring safer, more predictable returns instead.

Capital Gains

The increase in the value of an investment or real estate that gives it a higher worth than the purchase price.

Tax Treatment

The application of revenue law to a financial transaction, affecting how it is taxed.