Assume the Foreign Exchange Rate for the Euro Was U

question 50

Multiple Choice

Assume the foreign exchange rate for the euro was U.S. $1.00 = .70 euro last month. This month, the exchange rate is U.S. $1.00 = .72 euro. All things equal, the dollar value of European stocks

• A) decreased.
• B) increased.
• C) stayed the same.
• D) would vary depending on the country.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and loan payments.

Operating Leverage

A measure of how sensitive a company's operating income is to changes in revenue, indicating the degree of fixed versus variable costs.

Fiscal Policy

Government policies regarding taxation and spending to influence the economy.