When exchange rates change:

Multiple Choice:

O U. S. firms that produce domestically and sell only to domestic customers will be unaffected.

O U. S. firms that produce domestically and sell only to domestic customers can be affected if they compete against imports.

O U. S. firms that produce domestically and sell only to domestic customers will be affected, but only if they borrow in foreign currency to finance their domestic operations.

O U. S. firms that produce domestically and sell only to domestic customers will be unaffected, and U. S. firms that produce domestically and sell only to domestic customers can be affected if they compete against imports.

Question

Business

Paul

19 January, 12:22

When exchange rates change:

Multiple Choice:

O U. S. firms that produce domestically and sell only to domestic customers will be unaffected.

O U. S. firms that produce domestically and sell only to domestic customers can be affected if they compete against imports.

O U. S. firms that produce domestically and sell only to domestic customers will be affected, but only if they borrow in foreign currency to finance their domestic operations.

O U. S. firms that produce domestically and sell only to domestic customers will be unaffected, and U. S. firms that produce domestically and sell only to domestic customers can be affected if they compete against imports.

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Answers (1)

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Lorelai Hahn · Answer 1

Correct answers:

B) U. S. firms that produce domestically and sell only to domestic customers can be affected if they compete against imports - If the dollar gains value against other curriencies, for example, the Euro, European products might become cheaper than American products.

C) U. S. firms that produce domestically and sell only to domestic customers will be affected, but only if they borrow in foreign currency to finance their domestic operations. - For example, If the dollar loses value against the Euro, an American company with debts in euros will have to pay more capital and interest, and this will likely result in a worse financial position.