If a Dollar Buys More Potatoes in the U

question 257

Multiple Choice

If a dollar buys more potatoes in the U.S. than in France, then

• A)the real exchange rate is greater than 1; a profit might be made by buying potatoes in the U.S. and selling them in France.
• B)the real exchange rate is greater than 1; a profit might be made by buying potatoes in France. and selling them in the U.S.
• C)the real exchange rate is less than 1; a profit might be made by buying potatoes in the U.S. and selling them in France.
• D)the real exchange rate is less than 1; a profit might be made by buying potatoes in France and selling them in the U.S.

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Definitions:

Cost of Goods Sold

Represents the direct costs attributable to the production of goods sold by a company, including materials and labor.

Return on Equity

A measure of a corporation’s profitability that reveals how much profit a company generates with the money shareholders have invested.

Price-Earnings Ratio

A metric assessing the relationship between a company's stock price and its earnings on a per-share basis, useful in judging whether a stock is undervalued or overvalued.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, representing the portion of sales that turns into profits.