In 2014,global revenue for IBM was $2 billion lower when measured in dollars than when measured in local currencies.The reason for this discrepancy is the value of the
A)euro decreased relative to the British pound.
B)British pound increased relative to the U.S.dollar.
C)U.S.dollar increased relative to most other currencies.
D)U.S.dollar decreased relative to the Japanese yen.

Question

Quizplus · Accepted Answer

When IBM's revenue is measured in local currencies, it is not affected by fluctuations in the exchange rates of different currencies. However, when the revenue is converted into U.S. dollars, the exchange rates come into play. If the U.S. dollar strengthens (i.e., increases in value relative to other currencies), then the revenue expressed in dollars will be lower than the revenue expressed in local currencies. This is because the same amount of local currency will translate into fewer dollars. Therefore, the most likely reason for the discrepancy in IBM's revenue in 2014 is that the U.S. dollar increased in value relative to most other currencies.

In 2014,global Revenue for IBM Was $2 Billion Lower When