In the Long Run, the Nominal Exchange Rate

question 382

Multiple Choice

In the long run, the nominal exchange rate

• A) is not related to the real exchange rate, since the real exchange rate is the true value of currencies.
• B) is a monetary phenomenon, determined by the quantities of money in two countries.
• C) will not change if prices in one country change, since prices are nominal variables.
• D) is fixed by world central banks, as indicated by the fixed exchange rate system.

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Definitions:

Financial Statements

Are formal records of the financial activities and position of a business, person, or other entity, providing an overview of a company's financial condition in both short and long term.

Average Collection Period

The ratio of accounts receivable to daily sales. Also called days’ receivables.

Financial Statements

Documents that report the financial activities and condition of a business or entity, including the balance sheet, income statement, and cash flow statement.

After-Tax Profit Margin

A profitability ratio calculated by dividing net income after taxes by net sales, showing what percentage of sales translates into profits after all expenses.