Suppose the German Subsidiary of a U

question 1

Multiple Choice

Suppose the German subsidiary of a U.S. firm had current assets of DM3 million, fixed assets of DM6 million and current liabilities of DM3 million both at the start and at the end of the year. There are no long?term liabilities. If the DM depreciated during that year from $.48 to $.38, the FASB?52 translation gain (loss. to be included in the parent company's equity account is

• A) 0, since the current assets and current liabilities cancel
• B) +$300,000
• C) -$350,000
• D) -$600,000

Understand the importance of institutional changes, like land reform, in the economic development of developing nations.

Comprehend the mechanisms to break the vicious circle of poverty in developing nations, particularly through capital accumulation.

Recognize the significance of saving rates and their implications for investment and growth in developing countries.

Identify sociocultural impediments to economic growth and how they affect developing nations.

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Definitions:

Price Ceilings

Regulatory measures that set a maximum price that can be charged for a product or service, intended to protect consumers from excessive pricing.

Price Floors

Legally established minimum prices for goods or services, aimed at preventing prices from falling too low, often used in agriculture.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to negative externalities or a lack of public goods.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product for which each seller offers an identical product.