Suppose That the Exchange Rate Between British Pounds and U

question 34

Multiple Choice

Suppose that the exchange rate between British pounds and U.S. dollars is originally $2.50 per pound. If it then changes to $3 for 1 pound, imports of British goods into the U.S. tend to:

• A)​rise.
• B)​fall.
• C)​stay the same.
• D)​change in an indeterminate direction.

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Definitions:

Service Revenue

Income earned by a company for the services it has provided to its customers.

Utilities Expense

Costs incurred by a business for basic services such as electricity, water, and gas, classified under operating expenses in the income statement.

Owner's Drawings

Funds taken out of a business by the owner in a sole proprietorship or partnership for individual purposes.

Capital Account

An account showing the net worth of a business at a specific point in time, comprised of the owner's equity, investments, and retained earnings.