If the Price Level Increases in Canada Relative to Foreign

question 10

Multiple Choice

If the price level increases in Canada relative to foreign countries, then Canadian consumers will purchase more foreign goods and fewer Canadian goods.This statement describes:

• A)the output effect.
• B)the foreign trade effect.
• C)the real-balances effect.
• D)the shift-of-spending effect.

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Definitions:

Earnings per Share

A company's net profit divided by the number of its common shares outstanding, indicating the company's profitability on a per-share basis.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Sales

The activity of selling goods or services in exchange for money or other compensation.

DFL

Degree of Financial Leverage, a ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income.