Use the Figure Below to Answer the Following Question(s)

question 45

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 18-2

-Figure 18-2 illustrates supply and demand for U.S.dollars and British pounds in the foreign exchange market.Which of the following would cause the demand for foreign exchange (pounds) to shift from D₁ to D₂?

• A)an increase in the real interest rate in Britain relative to the United States
• B)higher inflation in Britain than in the United States
• C)higher income growth in Britain than in the United States
• D)an increase in the number of British citizens vacationing in the United States

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Definitions:

Equity Method

A method for recording investments in which the investor acknowledges its share of investee profits and losses in proportion to its ownership.

Income Recognition

The process by which revenue is accounted for and recorded on the financial statements in the period it is earned and can be reliably measured.

Equity Method

The equity method is an accounting technique used for recording investments in associate companies, recognizing the investor’s share of profits or losses which is proportional to their investment.

Investor's Financial Statements

Financial reports prepared to give shareholders and potential investors insight into a company's financial status and operations.