Some Nations Use External Financial Assets as a Buffer and a Precautionary

question 136

Multiple Choice

Some nations use external financial assets as a buffer and a precautionary measure to:

• A) allow their net external balance to average to zero over time.
• B) ensure that if they must default on debt, foreigners cannot confiscate assets.
• C) reduce or eliminate the need to go into debt to smooth consumption.
• D) find new investment opportunities in the domestic market.

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Definitions:

Increase In Value

A rise in the monetary worth or market value of an asset.

Dollar

A unit of currency used in various countries, notably the United States, represented by the symbol $.

Consumer Spending

The aggregate sum of funds households in an economy expend on products and services.

Medical Care

The diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans, provided by health professionals.