When the Currency of a Country Is Stronger in Foreign

question 18

Multiple Choice

When the currency of a country is stronger in foreign exchange markets than its PPP exchange rate,the dollar value of the country's GDP per capita when measured by current exchange rates is ________.

• A) smaller than when measured by PPP exchange rates
• B) larger than when measured by PPP exchange rates
• C) the same as when measured by PPP exchange rates
• D) slightly the same as when measured by PPP exchange rates

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Definitions:

Income Tax Expense

The amount of money a company owes in taxes based on its taxable income for a given fiscal period.

Cost Method

An accounting method used for investments, where the investment is recorded at cost and earnings from the investment are recognized only when dividends are received.

Retained Earnings

The portion of a company's profit that is held or retained and not paid out as dividends to shareholders.

Common Shares

A type of equity investment representing ownership in a corporation, with rights to dividends and voting at shareholder meetings.