Under a System of Floating Exchange Rates, a Shortage in a Currency

question 146

Multiple Choice

Under a system of floating exchange rates, a shortage in a currency will lead to a(n)

• A) depreciation of that currency.
• B) appreciation of that currency.
• C) long-term surplus of that currency.
• D) long-term shortage of that currency.

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Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services produced by a business.

Contribution Margin

The gap between the income from sales and variable expenses, which serves to offset fixed expenses and produce earnings.

CVP Income Statement

An income statement format that organizes costs based on whether they are fixed or variable and is used in Cost-Volume-Profit analysis to determine how revenues, costs, and profits are influenced by changes in volume.