Which of the Following Is True

question 216

Multiple Choice

Which of the following is true?

• A)If the Australian dollar depreciates, the Australian trade deficit decreases, since Australian products become cheaper to foreigners.
• B)If the Australian dollar depreciates, the Australian trade deficit decreases, since Australian products become more expensive to foreigners.
• C)If the Australian dollar depreciates, the Australian trade deficit increases, since Australian products become more expensive to foreigners.
• D)If the Australian dollar appreciates, the Australian trade deficit decreases, since Australian products become cheaper to foreigners.
• E)If the Australian dollar appreciates, the Australian trade deficit decreases, since Australian products become more expensive to foreigners.

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Definitions:

Expenses and Losses

Costs incurred in the operation of a business (expenses) and decreases in value not directly related to operations (losses).

Depreciation

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Direct Method

A cash flow statement approach that lists major classes of gross cash receipts and payments.

Revenues and Gains

Income generated from normal business operations and other positive financial events.