ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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current account
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financial account
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official reserves account
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None of the above
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Detailed explanation-1: -Repercussions. The repercussions for China of such an offloading would be worse. An excess supply of U.S. dollars would lead to a decline in USD rates, making RMB valuations higher. It would increase the cost of Chinese products, making them lose their competitive price advantage.
Detailed explanation-2: -The buying and selling of federal government bonds by the Fed are called open-market operations. When the Fed buys or sells government bonds, it adds or subtracts reserves from the banking system. Such changes affect the money supply.
Detailed explanation-3: -In financing the federal deficit, the federal government borrows from the public by issuing Treasury securities, which are sold at auction according to a schedule that is published quarterly.