In the balance-of-payments of Canada,the government purchase of Canadian dollars through the sale of official reserves of foreign currencies is recorded as:

Question

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This action is recorded as a positive entry in the financial account (part of the balance of payments) because it represents an inflow of capital, as the government is effectively buying back its own currency by using its reserves of foreign currencies.

In the Balance-Of-Payments of Canada,the Government Purchase of Canadian Dollars