Suppose That the Dollar Buys More Bananas in Honduras Than

question 187

Multiple Choice

Suppose that the dollar buys more bananas in Honduras than in Costa Rica.How could traders make a profit?

• A) by buying bananas in Honduras and selling them in Costa Rica,which would tend to raise the price of bananas in Honduras
• B) by buying bananas in Honduras and selling them in Costa Rica,which would tend to raise the price of bananas in Costa Rica
• C) by buying bananas in Costa Rica and selling them in Honduras,which would tend to raise the price of bananas in Costa Rica
• D) by buying bananas in Costa Rica and selling them in Honduras,which would tend to raise the price of bananas in Honduras

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Definitions:

Transaction Analysis

The process of studying a transaction to determine its economic effect on the business in terms of the accounting equation.

Accounting Equation

The foundational principle of double-entry bookkeeping, stating that assets equal liabilities plus shareholders' equity.

Components

Elements or parts that combine to form a larger product or system.

Net Profit Margin Ratio

A profitability metric that shows the percentage of revenue that remains as net income after all expenses have been deducted.