The Effect of an Increase in a Country's Inflation on Its

question 53

Multiple Choice

The effect of an increase in a country's inflation on its net exports is equivalent to

• A)a depreciation of its currency.
• B)an appreciation of its currency.
• C)an increase in the prices of its imports.
• D)a decrease in the prices of its exports.
• E)a decrease in the price of its currency in term of a foreign currency.

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Definitions:

Greenfield Venture

Refers to a type of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Wholly Owned Subsidiary

A company whose entirety of shares is held by another corporation, the parent company, thus giving the parent complete control.

E-Commerce Firm

A company that conducts its business transactions through the internet.

Entry Tactic

A strategy employed by businesses to enter a new market, overcome barriers, and compete effectively.