If a Country Finds Its Fixed Rate Currency Falling

question 252

Multiple Choice

If a country finds its fixed rate currency falling:

• A)it can use foreign exchange reserves to purchase some of its currency.
• B)it can add to its foreign exchange reserves by selling some of its currency.
• C)it cannot use monetary policy to maintain its exchange rate.
• D)it will allow its currency devaluate.

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Definitions:

Accounts Receivable Subsidiary Ledger

An Accounts Receivable Subsidiary Ledger is a detailed ledger that contains individual accounts for all debtors, tracking their sales on credit and payments.

General Ledger

The general ledger is the primary accounting record of a company that uses double-entry bookkeeping, summarizing all transactions into accounts for financial statements.

Allowance for Doubtful Accounts

a contra-asset account that estimates the portion of accounts receivable that may not be collectible.

Trade Receivables

Trade receivables are amounts owed to a business by its customers resulting from the sale of goods or services on credit.