International Finance And Treasury - Study Mode

[#401] The balance of payments always has a zero balance. This is caused by.
Correct Answer

(C) the system of double entry bookkeeping

Explanation

Solution: The balance of payments always has a zero balance. This is caused by the system of double entry bookkeeping. Double entry, a fundamental concept underlying present-day bookkeeping and accounting, states that every financial transaction has equal and opposite effects in at least two different accounts.

[#402] Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called.
Correct Answer

(D) financial markets

Explanation

Solution: Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called financial markets. A financial market is a broad term describing any marketplace where trading of securities including equities, bonds, currencies, and derivatives occur.

[#403] The bond markets are important because.
Correct Answer

(C) they are the markets where interest rates are determined

Explanation

Solution: The bond markets are important because they are the markets where interest rates are determined. The bond market broadly describes a marketplace where investors buy debt securities that are brought to the market by either governmental entities or publicly-traded corporations. National governments generally use the proceeds from bonds to finance infrastructural improvements and pay down debts.

[#404] Increasing interest rates.
Correct Answer

(A) discourage corporate investments

Explanation

Solution: Increasing interest rates discourage corporate investments. Higher interest rates tend to moderate economic growth. They increase the cost of borrowing, reduce disposable income and therefore limit the growth in consumer spending. Higher interest rates tend to reduce the rate of economic growth and inflationary pressures.

[#405] The exchange rate is the.
Correct Answer

(D) Price of one country currency in terms of another country currency

Explanation

Solution: The exchange rate is the Price of one country currency in terms of another country currency. An exchange rate is the value of a nation's currency in terms of the currency of another nation or economic zone.