When a Reserve Currency Country Runs a Balance of Payments

question 85

Multiple Choice

When a reserve currency country runs a balance of payments deficit and a nonreserve currency country buys the reserve currency to finance the reserve country's deficits,the monetary base in the nonreserve country ________ and the monetary base in the reserve country ________.

• A) increases; decreases
• B) increases; does not change
• C) decreases; does not change
• D) decreases; increases

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Definitions:

Superego

(sue-per-EE-go) The moral system of the personality, which consists of the conscience and the ego ideal.

Angel

A spiritual being believed to act as a messenger of God, typically portrayed as a human figure with wings.

Conscience

An inner sense of right and wrong that guides a person's thoughts and actions.

Ego Ideal

The component of the personality composed of the standards of what one aspires to be, based on societal values and parental expectations.