A Fixed Exchange Rate Is an Exchange Rate Whose Value

question 104

Multiple Choice

A fixed exchange rate is an exchange rate whose value:

• A)is established annually by the International Monetary Fund.
• B)varies according to supply and demand for the currency in the foreign exchange market.
• C)is set by official government policy.
• D)reflects the comparative advantage of the home country versus other foreign countries.

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Definitions:

Operating Cycle

The operating cycle is the duration it takes for a business to convert its inventory and other inputs into cash through sales, encompassing the production and sales process.

Accounts Receivable Turnover

A financial metric that measures how frequently a business can convert its accounts receivable into cash over a specific period.

Inventory Turnover

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Operating Cycle

The period between the acquisition of inventory by a business and the collection of accounts receivable generated from the sale of that inventory.