When It Is Unclear Whether a Currency Depreciation Is Permanent,exporters

question 4

Multiple Choice

When it is unclear whether a currency depreciation is permanent,exporters may choose not to raise their prices,especially if they fear losing market share in markets with existing production and distribution facilities.This is known as the:

• A) market share effect.
• B) beachhead effect.
• C) pass-through effect.
• D) parity effect.

---

Definitions:

Income Recognition

The accounting principle that determines the specific conditions under which income becomes recognized as revenue on the financial statements.

Put Option

A financial derivative that gives the holder the right but not the obligation to sell a specified amount of an underlying asset at a predetermined price within a specified time frame.

Foreign Currency

Monetary units issued by countries other than the home country of a business or investor, involved in international transactions.

Right to Sell

The legal permission or authority given to a person or entity to sell a product or service.