How Does a Decrease in Value of a Country's Currency

question 105

Multiple Choice

How does a decrease in value of a country's currency relative to other currencies affect its balance of trade on goods and services?

• A) A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and reduces the balance of trade on goods and services.
• B) A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and reduces the balance of trade on goods and services.
• C) A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and increases the balance of trade on goods and services.
• D) A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and increases the balance of trade on goods and services.

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Definitions:

Sales Over Cost

It refers to the ratio or difference between the sales generated and the cost of the goods sold, aimed at measuring profitability.

Gross Profit

The income a firm generates once it subtracts the expenses involved in the production and sale of its goods, or the expenses incurred from offering its services.

Income From Operations

The earnings generated from a company's everyday, core business operations.

Single-Step Statement

An income statement format that totals revenues and subtracts expenses to find the net income, using only one step.