Why Do FIs Face a Return or Interest Earnings Penalty

question 16

Multiple Choice

Why do FIs face a return or interest earnings penalty by holding large amounts of assets such as cash,T-bills,and T-bonds to reduce liquidity risk?

• A)These assets carry a reserve requirement tax.
• B)These assets offer low returns.
• C)These assets offer higher returns that reflect their risk.
• D)Inflation increases the purchasing power value of these assets.

Identify and describe key international economic organizations and their impact on global trade.

Recognize the significance of trade adjustment assistance and the debates surrounding its effectiveness.

Understand the historical and theoretical arguments against protectionism.

Gain knowledge of the scale and significance of international trade for various countries.

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Definitions:

Vietnam War

A protracted conflict (1955-1975) between North Vietnam, supported by its communist allies, and South Vietnam, supported by the United States and other anti-communist nations.

ISIS/Islamic State

A militant group that follows a fundamentalist doctrine of Sunni Islam and aimed to establish a caliphate in the Middle East.

U.S. Invasion

Refers to military operations where the United States has entered another country with armed forces, often leading to significant political and social implications.

Foreign Policy

A government's strategy in dealing with other nations, involving diplomacy, military actions, and trade agreements.