When a Country Enforces Exchange Controls the Profits of a Subsidiary

question 4

Multiple Choice

When a country enforces exchange controls the profits of a subsidiary in that country are referred to as:

• A) stuck funds.
• B) locked profits.
• C) blocked funds.
• D) lost funds.

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Definitions:

Real Interest Rate

The nominal interest rate adjusted for inflation, reflecting the true cost of borrowing or the true yield on an investment.

Inflation

The rate of growth in the average price of goods and services, which leads to a decline in the power of currency to buy goods.

Money-Supply Curve

A graphical representation showing the relationship between the quantity of money in the economy and the price level or interest rate.

Federal Reserve

The central banking system of the United States, responsible for setting monetary policy, regulating banks, maintaining financial stability, and providing financial services to depository institutions, the U.S. government, and foreign official institutions.