If the Risk of Buying U

question 144

Multiple Choice

If the risk of buying U.S.assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds,then

• A)net capital outflow and the real exchange rate will rise.
• B)net capital outflow will rise and the real exchange rate will fall.
• C)net capital outflow will fall and the real exchange rate will rise.
• D)net capital outflow and the exchange rate will fall.

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Definitions:

Property Tax

A levy imposed by a government on a property owner, based on the value of the property.

Accrue

The process of accumulating or recognizing expenses or income over time, even before cash transactions occur.

Payable

A liability to a creditor, often of a business, that represents an obligation to pay for goods or services received.

Prepaid Insurance

An asset account that represents insurance premiums paid in advance, covering future periods.