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.

---

Definitions:

Deceptive

Intentionally misleading or giving a false impression.

FTC

The Federal Trade Commission, a U.S. government agency responsible for consumer protection and the elimination and prevention of anticompetitive business practices.

Money-Back Guarantee

A promise made to customers that they will receive a refund if they are not satisfied with a product or service.

Ethical Businesspeople

Individuals in the business world who adhere to moral principles and practices in their professional conduct.