When a Country's Current Account Balance Is Added to Its

question 111

Multiple Choice

When a country's current account balance is added to its capital account balance, the sum should be:

• A) twice the current account.
• B) zero.
• C) positive.
• D) negative.

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Definitions:

Foreign Subsidiary

A foreign subsidiary is a company owned or controlled by another company, referred to as the parent company, which is located in a country different from the subsidiary.

Dollar/Peso Exchange Rate

The rate at which the currency of the United States (dollar) can be exchanged for the currency of countries using the peso.

Short Run Exchange Rate Risk

Short run exchange rate risk pertains to the potential for losses that investors or companies face due to fluctuations in the exchange rates between currencies in the near term.

Custom-Designed Refrigerators

Refrigerators that are specially designed to meet specific customer requirements, differentiating them from standard models.