Fiscal Expansion Under Fixed Exchange Rates Will Have What Temporary

question 51

Multiple Choice

Fiscal expansion under fixed exchange rates will have what temporary effect?

• A) the money supply will decrease
• B) output will decrease
• C) the exchange rate will increase
• D) the exchange rate will decrease
• E) there will be no effect

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Definitions:

Inventory

The overall quantity of products and materials in possession of a company, intended for future sale or to be used in manufacturing.

Variable Costing

Variable Costing is a costing method that only includes variable costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed manufacturing overhead.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, indicating how much contributes to covering fixed costs and generating profit.

Operating Income

A measure of a company's profitability from its regular business operations, excluding income and expenses from unusual or non-operational activities.