When a Country Must Make a Net Payment to Foreigners

question 59

Multiple Choice

When a country must make a net payment to foreigners because of a balance-of-payments deficit, the central bank of the country

• A)should do nothing.
• B)should run down its official reserve assets (e.g. gold, foreign exchanges, and SDRs).
• C)should borrow anew from foreign central banks.
• D)either b or c will work.

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Definitions:

Percent Change

A measure that denotes the degree of change over time, calculated by subtracting the original value from the new value, then dividing by the original value and multiplying by 100 to get a percentage.

Percent More

A relative increase from one value to another expressed as a percentage.

Initial Value

The starting value of a financial variable before any changes, such as interest or depreciation, are applied.

Percent Change

The measure of how much a quantity grows or shrinks compared to its previous value, often expressed as a percentage.