If Revenues and Costs Are Equally Sensitive to Exchange Rate

question 15

Multiple Choice

If revenues and costs are equally sensitive to exchange rate movements, MNCs may reduce their economic exposure by restructuring their operations to shift the sources of costs or revenues to other locations so that:

• A)cash inflows exceed cash outflows in each foreign currency.
• B)cash outflows exceed cash inflows in each foreign currency.
• C)cash inflows match cash outflows in each foreign currency.
• D)none of the above

---

Definitions:

Narrow Spans of Control

An organizational structure where a manager has a limited number of direct reports, allowing closer supervision and interaction.

Initiative

The ability to assess and initiate actions independently, often leading to innovation or problem-solving.

Flat Structure

An organization structure that has wide spans of control and few hierarchical levels.

Decision Making

The process of selecting a course of action from several alternatives to achieve a desired outcome.