Hedging with Currency Options Involves a Commitment by a Firm

question 12

True/False

Hedging with currency options involves a commitment by a firm to buy currency at a fixed rate.

---

Definitions:

Induced Consumption

The concept that the level of consumer spending increases as disposable income rises, and decreases as disposable income falls, all else being constant.

Induced Consumption

Induced consumption is the portion of consumer spending that increases with an increase in disposable income.

Disposable Income

The finance available to households for expenditures and saving after reducing income taxes.

Disposable Income

Money that households can earmark for spending and saving after income taxes are considered.