Which of the Following Statements Is Incorrect

question 15

Multiple Choice

Which of the following statements is incorrect?

• A) Central banks often consider adjusting a currency's value to influence economic conditions.
• B) If the U.S. central bank wishes to stimulate the economy, it could weaken the dollar.
• C) A weaker dollar could cause U.S. inflation by reducing foreign competition.
• D) Direct intervention occurs when the central bank influences the factors that determine the dollar's value.

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Definitions:

Future Cash Flows

Estimates of the amount of money expected to be received or paid out in the future through investment, business operations, or other financial activities.

Investment

The act of allocating resources, typically money, with the expectation of generating an income or profit.

Opportunity Cost of Capital

The return foregone by investing in a project instead of in comparable financial assets with similar risk.

Net Present Value

Net Present Value (NPV) is a financial metric that calculates the present value of all future cash flows (positive and negative) expected from an investment, adjusted for time and interest.