The Purpose of International Reserves Is to Finance

question 22

Multiple Choice

The purpose of international reserves is to finance:

• A) Short-term surpluses in the balance of payments
• B) Long-term surpluses in the balance of payments
• C) Short-term deficits in the balance of payments
• D) Long-term deficits in the balance of payments

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price.

Price Range

The spectrum of prices at which a particular product is sold in the market, from the lowest to the highest.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.