When Ford and General Motors Import Automobile Parts from Mexico

question 14

Multiple Choice

When Ford and General Motors import automobile parts from Mexico at prices below those they must pay in the US:

• A)workers who assemble Ford and General Motors vehicles become worse off
• B)US consumers, taken as a group, become worse off
• C)Mexican consumers, taken as a group, become worse off
• D)American companies that manufacture automobile parts become worse off

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Definitions:

Trading Floor

The physical or electronic space where traders buy and sell securities, such as stocks or futures, in financial markets.

Foreign Exchange Market

A global decentralized or over-the-counter market for trading currencies, determining the foreign exchange rates for every currency.

Triangle Arbitrage

A riskless profit strategy that takes advantage of discrepancies between three foreign currencies in the forex market.

Spot Market

A market where financial instruments or commodities are traded for immediate delivery, as opposed to future or forward delivery.