When Equilibrium Is Present in the Foreign Exchange Market, Which

question 153

Multiple Choice

When equilibrium is present in the foreign exchange market, which of the following will tend to be in balance?

• A) the value of goods exported and the value of goods imported
• B) real and nominal interest rates
• C) imports plus capital outflow and exports plus capital inflow
• D) tax revenues and government expenditures

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Definitions:

Production Costs

The total expense incurred in the manufacture of a product, including labor, materials, and overhead.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overhead, payroll, taxation, and interest payments.

Net Profit

The remaining income after all expenses, taxes, and costs have been subtracted from total revenue.

Value Chain

A series of activities by a firm that adds value to its products or services from conception to delivery.