The Basic Advantage of the ________ Method of Foreign Currency

question 18

Multiple Choice

The basic advantage of the ________ method of foreign currency translation is that foreign nonmonetary assets are carried at their original cost in the parent's consolidated statement while the most important advantage of the ________ method is that the gain or loss from translation does not pass through the income statement.

• A) monetary; current rate
• B) temporal; current rate
• C) temporal; monetary
• D) current rate; temporal

---

Definitions:

Disposable Income

Household fiscal resources for saving and spending following the deduction of income taxes.

Autonomous Consumption

The level of consumption that occurs when income is zero, representing the expenses that consumers must make for basic needs regardless of their income.

Induced Consumption

The portion of consumer spending that increases as disposable income rises, typically leading to more purchasing.

Disposable Income

The envelope of funds available to households for the purposes of saving and spending after adjusting for income taxes.