According to AASB 121/IAS 21 the Effects of Changes in Foreign

question 10

Multiple Choice

According to AASB 121/IAS 21 The Effects of Changes in Foreign Exchange Rates, the key economic factor to consider in determining an entity's functional currency is:

• A) which economic environment has the higher exchange rate.
• B) in which economic environment does the company incur the highest proportion of its production costs.
• C) which economic environment an entity primarily generates and spends cash.
• D) none of the above.

Interpret how changes in interest rates affect the behavior of borrowers and lenders in the marketplace.

Understand the basic concepts of the loanable funds theory including supply and demand dynamics.

Identify the factors that cause shifts in the supply and demand for loanable funds.

Analyze how changes in interest rates influence saving and borrowing behaviors.

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Definitions:

Reduces Reliability

Decreases the ability of a product or system to perform its required functions under stated conditions for a specified period of time.

Preventive Maintenance

Scheduled maintenance tasks performed on equipment and machinery to prevent unexpected breakdowns and to ensure operational efficiency.

System Needs Service

A condition indicating that a system requires maintenance, repair, or updating to ensure optimal performance or functionality.

Failures

Instances of a system, component, or process not performing as expected or ceasing to function entirely.