One Benefit of Flexible Exchange Rates Is That Flexible Exchange

question 87

Multiple Choice

One benefit of flexible exchange rates is that flexible exchange rates are

• A) making international transactions easier and cheaper.
• B) under the full control of the government.
• C) changing as the price levels and interest rates between countries change.
• D) very volatile.

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Definitions:

Explicit Costs

Payments made directly to individuals or entities for business operations, including salaries, leasing costs, and supplies.

Implicit Costs

The opportunity costs of using resources that a firm already owns, rather than the expenses directly paid out.

Explicit Costs

Direct, out-of-pocket expenses incurred by a firm or individual for business operations or activities.

Accounting Profits

The financial gain calculated by subtracting total explicit costs from total revenues, using generally accepted accounting principles.