In an Open Economy

question 63

Multiple Choice

In an open economy:

• A) the exchange rate is determined by the government.
• B) specialization in activities with a comparative advantage is not possible.
• C) trade is beneficial only to the larger economy.
• D) there is trade in goods, services, and/or assets with other countries.

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Definitions:

Profit Margin

A financial ratio that shows the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency of a company in generating profit.

Operating Profit Margin

A profitability ratio calculated as operating income divided by revenue, indicating the percentage of revenue that is left over after paying for variable costs of production.

Cost of Goods Sold

Expenses directly incurred from the production of a company's sold goods, involving the cost of labor and materials.

General and Administrative Costs

Expenses related to the day-to-day operations of a business that are not directly linked to production or sales.