The Current Account Balance Measures All of the Following Except

question 26

Multiple Choice

The current account balance measures all of the following except:

• A) Foreign cash payments
• B) Goods imports and goods exports
• C) Net receipts of investment income
• D) Unilateral transfers

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Definitions:

Unbiased Forward Rates

Forward exchange rates that are equal to the future spot rates, as predicted by economic theory, free from any speculation or bias.

Spot Exchange Rate

The current market price for exchanging one currency for another for immediate delivery.

Forward Exchange Rate

An agreed exchange rate for a currency to be exchanged at a future date, used in hedging and trading strategies.

Inflation Rates

The rate at which the cost of general goods and services inflates, consequently eroding the power to buy.