QUESTION 7 Official reserves balance could include o a Foreign governments bonds

Question

QUESTION 7 Official reserves balance could include o a Foreign governments bonds. b. Domestic country's stocks O c. Domestic government's bonds od. Foreign countries' stocks. QUESTION 8 In a country's balance of payments, which of the following transactions are debits? O a. Foreign bank balances owned by domestic residents are decreased Ob.Assets owned by domestic residents are sold to Oc.Domestic bank balances owned by foreigners are decreased d. Securities are sold by domestic residents to nonresidents

Explanation / Answer

Question 7.

The correct answer is: a) and a) Both.

Reasoning: Official reserves balance could include both - Foreign govenment bonds and Foreign countries' stock as they are liquid assets and can be used to bring balance in the BOP account.

Question 8.

The correct answer is : c) Domestic Bank balances owned by foreigners are decreased.

Reasoning: This transaction is a part of debit side of BOP because it results in outflow of Foreign exchange.

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