Which of the Following Is True of Contract Manufacturing

question 167

Multiple Choice

Which of the following is true of contract manufacturing?

• A) It provides a chance to start faster but with more risks.
• B) It involves decreased control over the manufacturing process.
• C) It leads to an increase in potential profits on manufacturing.
• D) It is the simplest way to enter a foreign market.
• E) It involves entering a foreign market by exporting surplus products.

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Definitions:

Purchasing Power Parity

A theory that states the exchange rates between two currencies are in equilibrium when their purchasing power is the same in both countries.

Foreign Exchange Market

A global marketplace for exchanging national currencies against one another, fundamental for international trade and investment.

Relative PPP

Stands for Relative Purchasing Power Parity, a theory that suggests that in the long term, exchange rates should adjust so that similar goods cost the same in different countries.

UIP

Uncovered Interest Parity, a financial theory stating that the difference in interest rates between two countries will equal the expected change in exchange rates between their currencies.