How Will the Exchange Rate (Foreign Currency Per Dollar)respond to an Increase

question 53

Multiple Choice

How will the exchange rate (foreign currency per dollar) respond to an increase in the relative rate of productivity growth in the United States in the long run?

• A)Exchange rates will rise.
• B)Exchange rates will fall.
• C)Exchange rates will be unaffected by changes in the relative rate of productivity growth in the United States,both in the short run and in the long run.
• D)The exchange rate will be affected in the short run,but not in the long run.

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Definitions:

Z-score Model

The Z-score model is a financial model that predicts the probability of bankruptcy of a firm based on various balance sheet figures and market measures.

Financial Ratios

Quantitative measures derived from financial statement data used to evaluate a company's financial performance, financial health, and to compare it with other businesses or the industry average.

Default Risk

The possibility that a borrower will be unable to make the required payments on their debt obligations.

Days Payable Outstanding

A financial ratio that measures the average number of days a company takes to pay its suppliers; an indicator of how efficiently a company manages its payables.