Which One of the Following Statements Is the Most Correct

question 68

Multiple Choice

Which one of the following statements is the most correct?

• A)If central banks are not sterilizing and the home country has a balance of payments surplus,any associated increase in the home central bank's foreign asset implies an increased home money supply.
• B)If central banks are not sterilizing and the home country has a balance of payments surplus,any associated increase in the home central bank's foreign asset implies a decreased home money supply.
• C)If central banks are not sterilizing and the home country has a balance of payments surplus,any associated increase in the home central bank's foreign asset implies an increased home money demand.
• D)If central banks are not sterilizing and the home country has a balance of payments surplus,any associated decrease in the home central bank's foreign asset implies an increased home money supply.
• E)If central banks are not sterilizing and the home country has a balance of payments shortage,any associated decrease in the home central bank's foreign asset implies an increased home money supply.

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Definitions:

Foreign-Currency Exchange

The process of converting one currency into another currency, a key element in international trade and investment.

Tax Credit

is an amount by which taxpayers can reduce the taxes they owe to the government, directly offsetting their tax liability rather than reducing taxable income.

Investment Projects

Initiatives undertaken by individuals, companies, or governments to allocate capital in the expectation of generating returns over time.

Capital Flight

Capital flight refers to the sudden and large-scale outflow of financial assets and capital from a country due to economic or political instability.