A Firm Produces Construction Equipment,some of Which It Sells to Domestic

question 38

Multiple Choice

A firm produces construction equipment,some of which it sells to domestic businesses and some of which it exports.Which of the following effects of capital flight in the country where it produces would likely increase the quantity of equipment it sells?

• A)both what happens to the interest rate and what happens to the exchange rate
• B)what happens to the interest rate but not what happens to the exchange rate
• C)what happens to the exchange rate but not what happens to the interest rate
• D)neither what happens to the interest rate nor what happens to the interest rate.

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Definitions:

Sales Forecasting

The process of estimating future sales volumes to make informed business decisions regarding inventory levels, workforce, and financial planning.

Economic Trends

Patterns or movements in economic indicators, such as GDP growth, unemployment rates, or inflation, that indicate the general direction of an economy.

Political and Legal Events

Incidents or changes in the political or legal environment that can impact business operations and outcomes.

Cash Payments Budget

A budget that estimates the cash payments an organization expects to make over a period, including expenses, purchases, and other outflows.