When the Australian Interest Rate Rises, the Demand for Australian

question 24

Multiple Choice

When the Australian interest rate rises, the demand for Australian dollars ________ and the exchange rate ________.

• A) increases; rises
• B) does not change; rises
• C) increases; falls
• D) decreases; rises
• E) decreases; falls

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Definitions:

Committed Fixed Costs

Expenses that a company has an obligation to pay, regardless of the level of production or sales activity, such as rent, insurance, and salaries.

One-Year

A period of time consisting of 12 consecutive months.

Sunk Cost

A cost that has already been incurred and cannot be recovered.

Contribution Format

An income statement format that separates fixed and variable costs, showing contribution margin which is sales revenue minus variable costs.