Consider a U

question 44

Multiple Choice

Consider a U.S.-based MNC with a wholly-owned European subsidiary selling a product sourced in euro and priced in euro with inelastic demand.Following a depreciation of the dollar against the euro,which of the following is the truest?

• A)Since they have inelastic demand,the U.S.firm can just pass through the impact of the exchange rate change.
• B)Since they have elastic demand,the U.S.firm cannot just pass through the impact of the exchange rate change.
• C)Since the exchange rate movement was favorable to the U.S.firm,there is no impact on the firm's position.
• D)none of the options.

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Definitions:

Homeostasis

The method through which living beings keep a consistent inner state regardless of variations in the outside world.

Protons

Positively charged subatomic particles found within the nucleus of an atom.

Magnetic Field

A field produced by electric currents or magnetic materials that exerts a force on other currents and magnetic materials.

Electrons

Subatomic particles with a negative charge, involved in chemical bonding and electricity.