Under a System of Flexible Exchange Rates, a Decrease in Demand

question 79

Multiple Choice

Under a system of flexible exchange rates, a decrease in demand for a nation's currency in the foreign exchange market will:

• A)​make it less expensive for foreigners to buy the nation's goods.
• B)​make it more expensive for the nation to import goods.
• C)​cause the nation's balance on current account to shift toward a deficit.
• D)​all of the above

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time; used in capital budgeting to analyze the profitability of a projected investment or project.

Foreign Currency

Foreign Currency denotes any currency other than the home currency of a country, used in international trade and investment.

Receivables Balance

The total amount of money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services sold on credit.