Under the Functional Currency Translation (FCT) Method, Which of the Following

question 15

Multiple Choice

Under the functional currency translation (FCT) method, which of the following statements is correct?

• A) The relationship of balance sheet items is best preserved.
• B) A single historic rate is used to translate all income statement items.
• C) A net asset exposure is most likely.
• D) Historic rates are used to translate most non-monetary items.

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Definitions:

Expansionary Monetary Policy

A policy by the central bank to increase the money supply and decrease interest rates to stimulate economic growth.

Short-run Phillips Curve

A graphical representation in economics showing a short-term inverse relationship between inflation and unemployment rates.

Long-run Aggregate-supply Curve

Represents the total quantity of goods and services that producers in an economy are willing and able to supply at different price levels when all production inputs are variable.

Short-run Aggregate-supply Curve

A curve in macroeconomics that shows the relationship in the short run between the price level and the quantity of goods and services that firms are willing and able to supply.