The Exchange-Rate Effect Is Based,in Part,on the Idea That

question 23

Multiple Choice

The exchange-rate effect is based,in part,on the idea that

• A)a decrease in the price level reduces the interest rate.
• B)an increase in the price level causes investors to move some of their funds overseas.
• C)an increase in the price level causes domestic goods to become less expensive relative to foreign goods.
• D)a decrease in the price level reduces spending on net exports.

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Definitions:

Mars Corporation

An international manufacturer known for its confectionery products, pet food, and other food products and services.

Dividend Yield Ratio

A financial metric indicating the amount of dividend expressed as a percentage of a current share price.

Common Stock

A type of equity security that represents ownership in a corporation, giving shareholders voting rights and a share in the company’s profits through dividends.

Market Price

The present rate at which a service or asset is available for purchase or sale.