Net Exports Will Rise If

question 93

Multiple Choice

Net exports will rise if:

• A) the currency depreciates.
• B) foreign income falls.
• C) domestic income increases.
• D) the terms of trade remain constant.

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Definitions:

Operating Income

Income generated from regular business operations, excluding non-operating activities like investment income.

Total Leverage

The combined effect of using both operating and financial leverage on a company's earnings per share.

Financial Leverage

Employing leveraged capital to enhance the expected returns on an investment.

Operating Leverage

The degree to which a company uses fixed operating costs, whereby a small change in sales significantly affects profitability.