All Else Equal, an Increase in the Base Country's Interest

question 13

Multiple Choice

All else equal, an increase in the base country's interest rate should cause a(n) ____ in the interest rate of a country that fixes its exchange rate to the base country.

• A) decline
• B) negligible impact
• C) increase
• D) change in the exchange rate regime

---

Definitions:

General Ledger Accounting Systems

Comprehensive accounting systems that collect, classify, and summarize financial transactions to create financial statements.

Cash Receipts

The collection of money (cash, checks, wire transfers) by a business during a given period, often recorded in the cash receipts journal.

Disbursements

Payments made by a business, including amounts paid out for expenses, through methods like checks or electronic transfers.

Accounts Receivable

This represents money owed to a company by its customers for goods or services provided on credit.