If Gold and the Dollar Are Substitutes, a Cut in the Japanese

question 126

Multiple Choice

If gold and the dollar are substitutes, a cut in the Japanese discount rate can be expected to

• A)appreciate the dollar and decrease the price of gold.
• B)depreciate the dollar and increase the price of gold.
• C)depreciate the dollar and decrease the price of gold.
• D)appreciate the dollar and increase the price of gold.

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Definitions:

Capital Budgeting

The process by which a business evaluates and plans for significant investments in projects or assets.

Useful Life

The estimated duration of time over which an asset is expected to be usable by its owner for its intended purpose.

Cash Inflows

Money received by a business from various sources, including sales, investments, and financing activities.

Project Profitability Index

A financial metric used to evaluate the attractiveness of a project or investment, calculated as the present value of future cash flows divided by the initial investment.