If Last Year One Dollar Equaled One Euro, and Then

question 66

Multiple Choice

If last year one dollar equaled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely NOT occur?

• A)European firms would pay more for raw materials imported from the United States.
• B)European consumers would purchase fewer U.S. products and services.
• C)Fewer Europeans would travel to the U.S. or study at U.S. universities.
• D)European firms would lower their prices on goods made with U.S. parts.

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Definitions:

Consolidation Process

The method of combining and presenting the financial statements of a parent company and its subsidiaries as one entity.

Shareholder's Equity

The residual interest in the assets of a corporation after deducting liabilities, often represented by stock capital and retained earnings.

Internally Generated Trademark

A trademark that has been developed through the internal efforts of a company, not acquired or purchased from a third party.

Contingent Liability

(a) A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or (b) a present obligation that arises from past events but is not recognised because: (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (ii) the amount of the obligation cannot be measured with sufficient reliability.