INTERNATIONAL MACROECONOMIC AND FINANCE CHOOSE THE OPTION IS HIGHLIGHTED BELOW A

Question

INTERNATIONAL MACROECONOMIC AND FINANCE

CHOOSE THE OPTION IS HIGHLIGHTED BELOW AND IF POSSIBLE YOU CAN EXPLAIN BECAUSE AM LEARNING

1a. According to IMF definitions and variable definitions provided in lecture, the purchase of foreign currency by a country's central bank (paying with the currency of its own country) should show up in that country's balance of payments accounts as

an increase in BPI.

an increase in OSB.

a decrease in OSB.

an increase in CA.

an increase in KA

1b.

.Suppose the variables R, R*, E, F, and Ee are defined . If we let x = (Ee - E)/E and y = (F- E)/E by definition, then according to the covered interest parity condition,

R = R* - y

R = R* / y

R = R* + y

R = R* - x

R = R* + x

Explanation / Answer

Answer:1A an increase in OSB.

because these are outflows.

Answer:1b R = R* + y

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