If an MNC Has a Net Inflow in One Currency

question 14

Multiple Choice

If an MNC has a net inflow in one currency and a net outflow of about the same amount in another currency, then the MNCs' transaction exposure is ____ if the two currencies are ____ correlated.

• A) high; positively
• B) low; negatively
• C) high; negatively
• D) none of the above

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Definitions:

National Income

National Income is the total value of all goods and services produced by a country over a specific period, reflecting the economic strength and standard of living in the country.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced by a country.

Real GDP

The measure of a country's economic output adjusted for price changes and inflation, reflecting the real value of goods and services produced.

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy, used to deflate or remove the effect of inflation from GDP.