Because the Real Exchange Is Composed of Three Variables That

question 25

Multiple Choice

Because the real exchange is composed of three variables that can all move simultaneously,many combinations of changes lead to a real appreciation of the pound (in this case) .Which one of the following options is NOT a basic movement?

• A) a decrease in the pound prices of U.S. goods, not holding the dollar prices constant
• B) a decrease in the dollar prices of U.S. goods, holding the exchange rate and the pound prices of goods constant
• C) an increase in the pound prices of goods, holding the exchange rate and the dollar prices of goods constant
• D) an increase in the nominal exchange rate ($/?), holding the dollar prices and pound prices of goods constant

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Definitions:

Receivables Policy

A set of guidelines a company follows to manage its accounts receivable, including credit terms, collection methods, and credit limits.

Credit-Granting Policy

A set of guidelines that a lender uses to determine whether to extend credit to borrowers and on what terms.

Credit Policy Effects

The impact of a company's credit policy on its cash flows, sales volume, and overall financial health, including aspects like credit terms and collection practices.

Cost Factor

A numerical or percentage factor that is applied to a base cost to determine the total cost of a project or production.