A Floating Exchange Rate Means That

question 50

Multiple Choice

A floating exchange rate means that

• A) market forces rather than government intervention determines currency values.
• B) the IMF will allow weak currencies to sink as a way of preserving the value of strong currencies.
• C) all currencies will be converted to their respective values of sterling silver prior to international purchases.
• D) the value of a country's currency is lower overseas than at home.
• E) transnational banks will be discouraged from relying on only one currency in international business.

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Definitions:

Operating Activities

Transactions and other events that are not investing or financing activities, usually involving the production and delivery of goods and services.

Indirect Method

A method used in cash flow statement preparation that adjusts net income for the changes in balance sheet accounts to calculate the cash from operating activities.

Accounts Payable

Obligations or debts owed by a company to its suppliers or creditors for goods and services received.

Sales

Income earned from the sale of products or services over a defined time frame.