When the Real Exchange Rate Rises

question 55

Multiple Choice

When the real exchange rate rises:

• A) exports will decrease but imports will be unaffected.
• B) imports will decrease but exports will be unaffected.
• C) exports will increase and imports will decrease.
• D) exports will decrease and imports will increase.

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Definitions:

Fixed Costs

Expenses that do not vary with the level of production or sales over the short term.

Management by Exception

A management strategy where managers only intervene in decision making when performance deviates significantly from standards, allowing more focus on important issues.

Controllable

Refers to costs or elements within a business that can be directly managed, influenced, or altered by decisions of management.

Noncontrollable

Refers to expenses or influences that cannot be altered or changed by the management due to external constraints or fixed contract terms.