Which of the Following Statements Is Incorrect

question 26

Multiple Choice

Which of the following statements is incorrect?

• A)A foreign exchange intervention affects the value of a country's currency by changing domestic interest rates
• B)Any central bank policy that influences the domestic interest rate will affect the exchange rate
• C)Higher U.S.interest rates would likely result in an appreciation of the U.S.dollar
• D)Changes in foreign exchange reserves always affect a country's monetary base

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Definitions:

Lenient Credit Terms

Lenient credit terms are more favorable conditions provided by a lender, allowing for longer repayment periods or lower interest rates to facilitate easier repayment for the borrower.

Uncollectible Accounts

Accounts receivable that are considered unlikely to be collected and thus written off as a bad debt expense.

Idle Cash

Idle cash refers to funds that are not currently invested, earning interest, or being used in operations, often representing missed opportunities.

Treasury Bills

Short-term government securities with maturities ranging from a few days to 52 weeks, often considered risk-free investments.