If US Inflation Suddenly Increased While European Inflation Stayed the Same

question 5

Multiple Choice

If U.S. inflation suddenly increased while European inflation stayed the same, there would be:​

• A) ​an increased U.S. demand for euros and an increased supply of euros for sale.
• B) ​a decreased U.S. demand for euros and an increased supply of euros for sale.
• C) ​a decreased U.S. demand for euros and a decreased supply of euros for sale.
• D) ​an increased U.S. demand for euros and a decreased supply of euros for sale.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenue.

Break-even Level

The point at which total costs equal total revenues, resulting in neither profit nor loss.

Variable Costs

Expenses that change in proportion to the amount of goods produced or the volume of sales.

Fixed Costs

Expenses that do not change with the level of production or sales in the short term, such as rent or salaries.