A Firm Produces Products for Which Substitute Products Are Produced

question 41

Multiple Choice

A firm produces products for which substitute products are produced in all countries. Depreciation of the firm's local currency should:

• A) decrease local sales as foreign competition in local markets is reduced.
• B) decrease the firm's exports denominated in the local currency.
• C) decrease the returns earned on the firm's foreign bank deposits.
• D) decrease the firm's cash outflow required to pay for imported supplies denominated in a foreign currency.
• E) None of these are correct.

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