If the Exchange Rate Changes from $2

question 209

Multiple Choice

If the exchange rate changes from $2.00 = 1 euro to $1.98 = 1 euro then

• A)the dollar has depreciated.
• B)the dollar has appreciated.
• C)the euro has appreciated.
• D)the euro has stayed constant in value.

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Definitions:

Capital Intensive

A business process or industry that requires large amounts of money and financial resources to produce a good or service.

Break-even Point

The juncture where the sum of all expenses matches the sum of all income, leading to neither a profit nor a deficit.

Variable Expense

Expenses that vary directly with the amount of production or the degree of operational activity.

Contribution Margin Ratio

The percentage of each sale that exceeds the variable costs of production.