Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 6, Problem 2E
To determine
The steps taken by domestic manufacturer to reduce the effect of exchange rate fluctuation.
Expert Solution & Answer
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Students have asked these similar questions
Country A follows a fixed exchange rate policy that pegs its currency to the currency
of country B, which is its main trading partner in a world where international capital
is fully mobile. However, due to unresolved structural inefficiencies (for example,
excessive bureaucracy), prices in country A tend to increase more than prices in
country B. Over time, if nothing else changes, and provided that country A is
committed to its current exchange rate policy, which of the following problems is
not anticipated for country A?
a.
Economic recession.
O b. Growing deficit in international trade balance.
c. Worsening inflation.
Od. Decreasing reserve assets.
Oe. Growing external indebtedness.
How does the exchange rate fluctuations pose a risk to manufacturing companies that rely upon an export strategy to compete in foreign markets.
What are the advantages and disadvantages of a managed floating exchange rate system to the foreign company?
Chapter 6 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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Similar questions
- List some advantages and disadvantages of the different exchange rate policies.arrow_forwardMany developing countries, like Mexico, have moderate to high rates of inflation. At the same time, international trade plays an important role in their economies. What type of exchange rate regime would be best for such a country’s currency vis à vis the U.S. dollar?arrow_forwardEast Asian economies had opened their borders to Foreign Direct Investment and their productivity increased over the last decades. Under a flexible exchange rate regime, their currencies became weaker compared to their partners’ currencies. True or false?arrow_forward
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