Other Things Being Equal, Which of the Following Is a Necessary

question 193

Multiple Choice

Other things being equal, which of the following is a necessary consequence of a depreciation of the U.S. dollar against other currencies?

• A) The terms of trade will move in favor of the United States.
• B) The United States will experience an increase in the volume of imports.
• C) International speculators will buy U.S. dollars and sell other currencies.
• D) U.S. exports will become cheaper relative to other nations' products.

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Definitions:

Cost-Volume-Profit Analysis

An accounting method used to determine how changes in costs and volume affect a company's operating income and net income.

Contribution Format

An income statement format that separates fixed and variable costs, showing the contribution margin which covers fixed costs and profits.

Absorption Costing

A bookkeeping strategy that encompasses all production expenses, including direct materials, direct labor, and variable plus fixed overhead, into the pricing of a product.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs and treats fixed overhead expenses as period costs.