Assume Floating Exchange Rates

question 50

Multiple Choice

Assume floating exchange rates.Suppose there are a 5% growth in U.S output and a 5% increase in foreign inflation.Then,which of the following will offset these changes?

• A) 10% increase in money supply.
• B) 10% decrease in money supply.
• C) 10% increase in the exchange rate.
• D) The two changes offset each other.

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Definitions:

Merchandise Inventory

Products a business maintains with the intent to sell to consumers as part of its regular operations.

Freight-In

Costs associated with bringing inventory to a business location, typically included in the inventory cost on the balance sheet.

F.O.B. Shipping Point

A shipping term indicating that a buyer is responsible for the goods, including the risk of loss and transportation cost, from the time they leave the seller's premises.

Invoice Approval Form

A document used to approve invoices for payment, ensuring the goods or services billed have been received and are satisfactory.