An Increase in U

question 119

Multiple Choice

An increase in U.S.income that increases American demand for all normal goods (including imports from Britain) will shift

• A)the U.S.demand curve for foreign exchange to the right, causing an increase in the dollar-per-pound exchange rate
• B)the U.S.demand curve for foreign exchange to the left, causing a decrease in the dollar-per-pound exchange rate
• C)the U.S.supply curve for foreign exchange to the right, causing a decrease in the dollar-per-pound exchange rate
• D)the U.S.supply curve for foreign exchange to the left, causing an increase in the dollar-per-pound exchange rate
• E)neither the U.S.demand curve for foreign exchange nor the U.S.supply curve for foreign exchange

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Definitions:

Functional Currency

The currency of the primary economic environment in which an entity operates, usually determining the currency it uses for reporting financial statements.

Exchange Gain

The gain resulting from a favorable change in exchange rates affecting the value of foreign currency transactions.

Accounts Receivable

Money owed by customers to a company for goods or services that have been delivered or used but not yet paid for.

Functional Currency

The primary currency of the primary economic environment in which an entity operates, usually the local currency or the currency of the main revenue-generating activities.