For This Question,assume That There Is a Simultaneous Tax Increase

question 20

Multiple Choice

For this question,assume that there is a simultaneous tax increase and monetary expansion.In a flexible exchange rate regime,we know with certainty that

• A)the exchange rate and output would both increase.
• B)the exchange rate would increase and output would decrease.
• C)the exchange rate would decrease.
• D)the exchange rate would decrease and output would increase.
• E) none of the above

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Definitions:

Variable Cost

Expenses that fluctuate in direct correlation with the volume of production or business operations.

Contribution Margin Ratio

A financial metric that represents the portion of sales revenue that is not consumed by variable costs and can contribute to covering fixed costs.

Break-Even Point

The point at which total costs equal total revenue, resulting in no profit but also no loss.

Mixed Costs

Expenses that contain both variable and fixed cost elements, changing in total with the level of activity but not in direct proportion.