An Advantage to Floating Exchange Rates Is That They Help

question 400

Multiple Choice

An advantage to floating exchange rates is that they help:

• A) insulate countries from currency fluctuations.
• B) insulate countries from recessions starting in other countries.
• C) keep exports from replacing domestic jobs.
• D) keep export prices down.

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Definitions:

Finished Goods Inventory

Represents the stock of completed products that are ready to be sold but have not yet been sold to customers.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been subtracted, indicating how much contributes to covering fixed costs and generating profit.

Fixed Costs

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance premiums.

Break-even

The point at which total costs and total revenues are equal, resulting in no net loss or gain for a business.