Question

Which of the following statements about fluctuating exchange rates and the related effects on companies competing in foreign markets is true? A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. D. The advantages of manufacturing goods in a particular country improve when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Answer 1

C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to

Explanation:

Fluctuating exchange rates will cause companies that are manufacturing goods in a particular country and are exporting much of what they produce to lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.

• If the currency of a country weakens compared to that of another country, the exchange power of such currency reduces.

It simply implies that more of the weak currency will have to be exchange for little of the stronger one.

• In this context, comparison is drawn between exchange rates and companies in foreign markets.
• For companies manufacturing their goods locally and exporting them, they have to pay more using their weak local currency to source for raw materials.
• This will eventually tell on the cost of production of the goods.
• To measure up, selling price of the exports will increase.
• This can dissuade potential buyers from patronizing them in the foreign market. .
• if they decide to keep selling at the previous price, loss can set in.

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Answer 2

Answer:

C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported

Explanation:

When the home country of a manufacturing company has a weak currency compared to the places where they are exported to then it means the company will record a loss due to people not wanting to patronize them. Such goods are usually considered most times as inferior.

It also means the exchange power of the home country will reduce when its weaker than the export countries.