Overshooting Occurs When Exchange Rates

question 2

Multiple Choice

Overshooting occurs when exchange rates:

• A)become volatile suddenly.
• B)continually diverge away from the long-run equilibrium.
• C)adjust faster in the long-run than they do in the short-run.
• D)adjust faster in the short-run than they do in the long-run.

---

Definitions:

Standard Price

A predetermined cost assigned to materials, labor, and overhead for budgeting and cost-control purposes.

Actual Cost

The true financial expenditure required to produce a product or service, as opposed to budgeted or standard costs.

Labour Rate Variance

The difference between the actual cost of direct labor and the standard cost of direct labor multiplied by the actual hours worked.

Direct Labour

Rephrased: The workforce directly involved in manufacturing products or providing services, whose costs directly affect the cost of goods sold.