Question

If a Canadian NHL team receives its revenues in Canadian dollars, but must pay its players in U.S. dollars, a weakening of the Canadian dollar relative to the U.S. dollar will cause
a.) the team's revenues to decreaseb.) the team's costs to increasec.) the team's revenues to increased.) the team's cost to decrease

Answer 1

Answer:

b.) The team's costs to increase

Explanation:

Nominally, revenues will be the same in Canadian dollars, because the Canandian dollar has become weaker against the U.S. dollar, but that does not necessarily mean that it has lost value in Canada itself.

However, now the NHL team will have to change more Canadian dollars for the same amount of U.S. dollars in order to pay its players, causing the team's wage costs to rise.