The Fact That Exchange Rates Are Nearly Identical in Different

question 93

Multiple Choice

The fact that exchange rates are nearly identical in different markets around the world is due to

• A)the actions of speculators
• B)official action by central banks around the world
• C)the actions of arbitrageurs
• D)agreement by policy makers of the major industrial countries
• E)the actions of currency converters

Identify and explain the main components and benefits of the market system, including the concept of the invisible hand.

Comprehend the coordination and incentive problems in centrally planned economies and how they impact economic efficiency.

Identify the issues related to risk management in both command and market economies.

Understand the implications of private property rights on resource allocation and productive efficiency.

---

Definitions:

Absorption Costing

The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.

Operating Leverage

Operating leverage describes the extent to which a company can increase its profits by increasing sales, highlighting the fixed versus variable costs structure.

Operating Income

A metric that calculates the profits realized from a business's core operations, excluding deductions of interest and taxes.

Break-even Point

The point at which total revenue equals total costs, resulting in no profit or loss for the business.