Which of the Following Is True When the Foreign Real

question 2

Multiple Choice

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

• A)The exchange rate rises,and net exports decline.
• B)The exchange rate rises,and net exports increase.
• C)The exchange rate falls,and net exports decline.
• D)The exchange rate falls,and net exports increase.

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Definitions:

Least-squares Regression

Least-squares regression is a statistical method used to determine the line of best fit by minimizing the sum of squares of the differences between observed and predicted values.

Variable Cost

A cost that changes in proportion to changes in the volume of activity, such as materials and labor directly involved in producing a product.

Machine Hour

A measurement of productive time, indicating how many hours a particular machine or piece of equipment has been operated.

High-low Method

In cost accounting, a strategy for estimating fixed and variable costs by looking at the peak and bottom activity levels.