Which of the Following Is True When the Foreign Real

question 103

Multiple Choice

Which of the following is true when the foreign real interest rate decreases,assuming everything else remains constant?

• A)The exchange rate rises and net exports declines.
• B)The exchange rate rises and net exports increases.
• C)The exchange rate falls and net exports declines.
• D)The exchange rate falls and net exports increases.

---

Definitions:

Maturity Value

The amount of money that will be paid out or received at the maturity of an investment, loan, or financial instrument.

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a specific point in time, offering a snapshot of its financial condition.

Operating Cycle

A measure of the time span between the purchase of inventory and the collection of cash from accounts receivable, highlighting the time taken for a business to turn its inventory into cash.

Current Liabilities

Short-term financial obligations a company must pay within a year, such as accounts payable, short-term loans, and accrued expenses.