When the Nominal Exchange Rate Changes from 4 Francs Per

question 60

Multiple Choice

When the nominal exchange rate changes from 4 francs per dollar to 6 francs per dollar, the dollar has:

• A)appreciated.
• B)depreciated.
• C)become overvalued.
• D)become undervalueD.In this case, the dollar now buys more francs than before.

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Definitions:

Revenue Expenditures

Costs that are expensed immediately and relate to the maintenance and repair of fixed assets or to the costs of the goods sold.

Construction

The process of building or assembling infrastructure, buildings, or other substantial physical structures.

Overhaul

A comprehensive process of inspection and repair to ensure an equipment or system operates efficiently.

Double-declining-balance Method

A method of depreciation that accelerates the depreciation of an asset by applying a fixed rate to its declining book value.