Foreign Direct Investment

Portfolio Investment

Official Reserves

All of the above

Foreign Direct Investment involves long-term investment in a foreign company, while Portfolio Investment involves short-term investment in foreign securities.

Foreign Direct Investment involves investment in physical assets, while Portfolio Investment involves investment in financial assets.

Foreign Direct Investment is typically made by multinational corporations, while Portfolio Investment is typically made by individual investors.

All of the above

It leads to appreciation of the domestic currency.

It leads to depreciation of the domestic currency.

It has no impact on the domestic currency.

It depends on the specific circumstances.

It leads to appreciation of the domestic currency.

It leads to depreciation of the domestic currency.

It has no impact on the domestic currency.

It depends on the specific circumstances.

It can intervene in the foreign exchange market to influence the value of the domestic currency.

It can impose capital controls to restrict the flow of foreign capital.

It can use monetary policy to influence the attractiveness of domestic assets to foreign investors.

All of the above

It can lead to a currency crisis.

It can make the country more vulnerable to external shocks.

It can lead to a loss of economic sovereignty.

All of the above

It can lead to a stronger currency.

It can help to finance economic growth.

It can attract foreign investment.

All of the above

A surplus in the Current Account typically leads to a deficit in the Financial Account.

A deficit in the Current Account typically leads to a surplus in the Financial Account.

There is no relationship between the Current Account and the Financial Account.

The relationship between the Current Account and the Financial Account depends on the specific circumstances.

It records the flow of foreign capital into and out of the country.

It helps to balance the Current Account.

It provides a snapshot of the country's external financial position.

All of the above

A surplus in the Financial Account leads to an increase in the country's net international investment position.

A deficit in the Financial Account leads to a decrease in the country's net international investment position.

The Financial Account has no impact on the country's net international investment position.

The impact of the Financial Account on the country's net international investment position depends on the specific circumstances.

Economic growth prospects

Interest rate differentials

Political stability

All of the above

By implementing capital controls

By changing monetary policy

By changing fiscal policy

All of the above

The difficulty in predicting the behavior of foreign investors

The potential for sudden shifts in capital flows

The need to balance the interests of domestic and foreign investors

All of the above

Transactions in the Financial Account can affect the demand for and supply of foreign currency.

Changes in the Financial Account can lead to changes in the exchange rate.

The Financial Account is the main determinant of the exchange rate.

None of the above