If a Firm Operates Strictly in One Country and Has

question 56

Multiple Choice

If a firm operates strictly in one country and has cash flows in only one currency then:

• A) it can easily avoid any sort of exchange rate risk.
• B) it will still face exchange rate risk if it produces a good or service that competes with imports in the home market.
• C) it will still face exchange rate risk if it uses an imported product or service in production.
• D) All of the above
• E) Both (b) and (c)

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Definitions:

Economizing Behavior

Choosing the option that offers the greatest benefit at the least possible cost.

Lowest Priced Item

The item with the least cost among a selection of goods, often highlighted in sales or comparative shopping.

Economic Way

An approach to understanding human behavior and decision-making within an economic framework of scarcity and resource allocation.

Radio Station

A service that broadcasts radio waves to transmit audio or multimedia content to an audience over a particular area.