Which of the Following Factors Most Likely Would Explain Why

question 80

Multiple Choice

Which of the following factors most likely would explain why a U.S. company would choose to operate in the United States despite much lower wages in Mexico?

• A) The low cost of transportation between the two countries
• B) The lower productivity of Mexican workers
• C) The absence of significant trade barriers
• D) The presence of many Japanese companies in Mexico

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Definitions:

Real Exchange Rate

The rate at which two currencies can be exchanged after adjusting for their differing levels of inflation.

Foreign Goods

Products or services that are produced in other countries and then imported into one's own country for consumption or use.

Central Bank

An institution that manages a state's currency, money supply, and interest rates, overseeing the commercial banking system of its country.

Prints Money

Refers to the action of a central bank creating additional currency as part of its monetary policy.