To Protect Against Loss as a Result of Adverse Currency

question 31

Multiple Choice

To protect against loss as a result of adverse currency fluctuations, an export firm may

• A) demand no cash at settlement.
• B) use a futures contract as a hedge.
• C) require the customer to make payment in the purchaser's currency.
• D) a Federal Reserve credit letter.

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Definitions:

Returns to Scale

The rate at which production output increases in response to a proportional increase in all inputs (factors of production).

Long-run Average Costs

The average cost per unit of output when all factors of production and costs are variable in the long run.

Production Process

Refers to the sequence of steps or activities involved in converting raw materials into finished goods or services.

Nondegradable Waste

Waste materials that cannot be broken down or decomposed by natural processes, leading to long-term environmental pollution.