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Discuss the factors that may be considered in determining if a Mexican subsidiary of a U.S.firm has the peso or the dollar as its functional currency.The subsidiary only manufactures component parts that are shipped to the U.S.firm's final production plant in Detroit.
Inflation Rate
The percentage increase in the general price level of goods and services in an economy over a period of time.
Nominal Interest Rates
Nominal interest rates are the stated interest rates on financial products without adjustment for inflation.
Rate of Inflation
The Rate of Inflation is the pace at which the general level of prices for goods and services is rising, eroding purchasing power.
Real Interest Rates
The interest rate adjusted for inflation, representing the real cost of borrowing and the real yield to lenders or investors.
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