MNCs Can Use ____ to Reduce Exchange Rate Risk

question 6

Multiple Choice

MNCs can use ____ to reduce exchange rate risk. This occurs when two parties provide simultaneous loans with an agreement to repay at a specified point in the future.

• A)forward contracts
• B)currency swaps
• C)parallel loans
• D)none of the above

---

Definitions:

Average Product

The output per unit of input, calculated by dividing total output by the quantity of inputs.

Law of Diminishing Returns

An economic principle stating that as additional units of a factor of production are added to a fixed amount of another factor, the incremental increase in output will eventually decrease.

Thomas Malthus

Thomas Malthus was an 18th-century British economist and demographer, best known for his theory that population growth would outpace agricultural production, leading to widespread poverty and famine.

Resource Availability

The degree to which essential inputs for production, like labor, technology, and raw materials, are readily accessible for economic activities.