If a Dollar Buys Less Coffee in the U

question 295

Multiple Choice

If a dollar buys less coffee in the U.S. than in Kenya, then

• A)the real exchange rate is greater than 1; a profit might be made by buying coffee in Kenya and selling it in the U.S.
• B)the real exchange rate is greater than 1; a profit might be made by buying coffee in the U.S. and selling it in Kenya.
• C)the real exchange rate is less than 1; a profit might be made by buying coffee in Kenya and selling it in the U.S.
• D)the real exchange rate is less than 1; a profit might be made by buying coffee in the U.S. and selling it in Kenya.

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Definitions:

Activity-based Costing

Activity-based costing is a more precise method of product costing that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption.

Idle Capacity

The portion of a company's resources or production capability that is not currently being utilized to its full potential.

Activity-based Costing

Activity-based costing allocates overhead costs based on the specific activities that contribute to overhead in producing a product or service.

Processing Batches

Groups of items or units processed together in one operation to improve efficiency, often in manufacturing or data processing contexts.