Under a System of Flexible Exchange Rates, an Increase in the Foreign

question 144

Multiple Choice

Under a system of flexible exchange rates, an increase in the foreign demand for the U.S. dollar in the foreign exchange market will cause the:

• A)​dollar to appreciate.
• B)​dollar to depreciate.
• C)​U.S.trade deficit to decrease.
• D)​U.S.inflation rate to increase.

---

Definitions:

Contribution Margin Ratio

A financial metric that measures the proportion of sales revenue that exceeds variable costs and contributes to covering fixed expenses and generating profit.

Net Loss

The result when a company's total expenses exceed its total revenues during a specific period, indicating a negative profit.

Break-Even Point

The point at which total costs and total revenues are exactly equal, resulting in no net profit or loss for a business.

Net Operating Income

The income from a company's primary business operations, excluding deductions of interest and taxes.