Assume that a Japanese car manufacturer exports cars to U. S. dealerships, which are priced in yen. The demand for those cars declines when the yen is strong. The manufacturer also produces some cars in the U. S. with U. S. materials and those cars are priced in dollars. The manufacturer could reduce its economic exposure by: pricing its exports in dollars. relying completely on Japanese suppliers for its parts. producing more automobiles in the United States. closing down most of its plants in the United States.
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