Ask Question
10 May, 15:09

When exchange rates change:

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

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

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.

D. 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.

+2
Answers (1)
  1. 10 May, 19:02
    0
    The correct answer is option B.

    Explanation:

    The changes in the exchange rate will affect those domestic firms that sell their products in the foreign market or those domestic firms that produce and sell domestically but has foreign companies as competitors.

    If the exchange rate falls, the price of domestic firms will decline as compared to imports. This will create more demand for domestic goods.

    If the exchange rate increases domestic goods will become costlier and imports will become cheaper. This will increase the demand for imports.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “When exchange rates change: A. U. S. firms that produce domestically and sell only to domestic customers will be unaffected. B. U. S. firms ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers