Question

1.In doing the calculations, round to two decimal places.

Given the following currency exchange rates:

Time period 1: AUD$ 1.15/CHF

Time period 2: AUD$ 1.55/CHF

a.From time period 1 to time period 2, CHF has depreciated or appreciated relative to AUD$.

A)depreciated B)appreciated

b.From time period 1 to time period 2, AUD$ has appreciated or appreciasted relative to CHF.

A)depreciated B)appreciated

c.In time period 1, if the price of Product A was CHF 39,500, then its price in AUD$ should be:

A)AUD$ 34,365

B)AUD$ 45,425

C) CHF AUD$ 34,365

D)CHF AUD$ 45,425

d.In time period 2, if the price of Product A was CHF 39,500, then its price in AUD$ should be:

A)AUD$ 25,675

B)AUD$ 61,225

C)CHF AUD$ 25,675

D)CHF AUD$ 61,225

e.In time period 1, if the price of Product B was AUD$ 65,000, then its price in CHF should be:

A)CHF 56,550

B)CHF 74,750

C)AUD$ CHF 56,550

D)AUD$ CHF 74,750

f.In time period 2, if the price of Product B was AUD$ 65,000, then its price in CHF should be:

A)CHF 42,250

B)CHF 100,750

C)AUD$ 42,250

D) AUD$ CHF 100,750

g.This year, a company has a sales revenue increase from last year, that means:

A)its profits have also increased.

B)its profits have decreased.

C)not enough information is given to know whether profits have increased or decreased.

2a. Relative to another currency, the value of US$:

A)can increase by more than 100% or decrease by more than 100%.

B)can increase by more than 100%, but cannot decrease by more than 100%.

C)can increase by not more than 100%, or decrease by more than 100%.

2b.When U.S. companies market their goods and services in developing nations that have a much lower level of per-capita income, they should always lower their price in these nations.

A)True B)False

Answer 1

Ques 2(b)

When US market its prodict in another nation that has a relatively a small level of GDP per capita they should always lower its price - the statement is False. It can be the case that they sell the product without lowering its price. For eg if there is a life saving drug that is only manufactured by the US and it has a monopoly then they can charge the price they want.