Economists

question 27

Multiple Choice

Economists

• A)agree that the costs of moderate inflation are small.The increase in unemployment from reducing inflation will be smaller if inflation expectations remain high.
• B)agree that the costs of moderate inflation are small.The increase in unemployment from reducing inflation will be larger if inflation expectations remain high.
• C)disagree about the costs of moderate inflation.The increase in unemployment from reducing inflation will be smaller if inflation expectations remain high.
• D)disagree about the costs of moderate inflation.The increase in unemployment from reducing inflation will be larger if inflation expectations remain high.

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Definitions:

Historical Rates

Exchange rates used in the valuation of foreign currency transactions and translations, based upon the rates at the time of the original transaction.

Net Asset Balance Sheet Exposure

The risk of change in the value of a company's net assets due to exchange rate movements, reflected in the balance sheet.

Translation Adjustment

An adjustment made in the process of translating a foreign subsidiary's financial statements into the parent company's reporting currency.

Foreign Currency

Currency used in a country other than one's own, involving exchange risk when converting from one currency to another.