The Gains from Having an Optimum Currency Include

question 7

Multiple Choice

The gains from having an optimum currency include

• A) price differentiation.
• B) lower competition.
• C) lower transaction costs.
• D) independent monetary policies run by the central bank of each member country.

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Definitions:

Two-transaction Theory

A concept in accounting that proposes a business transaction affects two or more accounts in the ledger, which is fundamental to the double-entry bookkeeping system.

Exchange Gains

Profits earned from the favorable movement of currency exchange rates that impact the value of foreign currency transactions.

Net Income

is the total profit or loss of a company after all revenues, expenses, taxes, and dividends are accounted for, over a specific period.

Forward Exchange Contract

A financial agreement to exchange a specific amount of one currency for another at a predetermined future date and rate, used to hedge against currency risk.