Exchange rate
Not what you're looking for?
1) Under a fixed exchange rate system, U.S. inflation would have a greater impact on inflation in other countries than it would under a freely floating exchange rate system.
true.
false.
2) Rockford Co. is a U.S. manufacturing firm that produces goods in the U.S. and sells all products to retail stores in the U.K.; the goods are denominated in pounds. It finances a small portion of its business with pound-denominated loans from British banks. Which of the following is true? (Assume that the amount of products to be sold is guaranteed by contracts.)
a) The dollar value of sales is higher if the pound depreciates against the dollar.
b) The dollar value of sales is unaffected by the pound's exchange rate.
c) A and B.
d) None of the above.
Purchase this Solution
Solution Summary
Answers to 2 multiple choice questions on exchange rates.
Solution Preview
1) Under a fixed exchange rate system, U.S. inflation would have a greater impact on inflation in other countries than it would under a freely floating exchange rate system.
true.
false.
Answer: true.
Under a freely floating exchange system, US inflation would cause dollar to depreciate.Thus the increase in prices of US manufactured goods due to inflation would be offset by a depreciated dollar. The price in dollar terms has ...
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance
This quiz test introductory finance topics.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.