Which of the following choices is the least likely impact associated with a stronger currency for a country? O Decreased foreign investment and slower economic growth ● Lower costs of imports and improved consumer purchasing power Higher inflation and reduced investor confidence
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- When one currency declines against the dollar, it may correspond to lower inflation in the foreign country and as a result, historical operating income and ROI's will be higher. True or False ?If a U.S.-based MNC focused completely on exporting, then its valuation would likely be adversely affected if most currencies were expected to appreciate against the dollar over time. Group of answer choices True FalseWhich of the following is not among the advantages of international trade? * O Increased competition Consumers will not benefit from lower prices O Consumer can enjoy a greater variety of goods Business growth
- Internationalization theory suggests that Select one: a. FDI is more likely to take place when the costs of negotiating, monitoring, and enforcing a contract with a second firm is higher. Ob. FDI is more likely to occur when prices are high, competition is intense and lower trade barriers as well as exchange rates are strong. O c. FDI occurs in developing countries only in order to boost their economies and improve the country position. d. None of the options are applicable. Next pageWhich of the following factors will NOT increase the value of a currency in foreign markets? A. High inflation in that country B. High interest rates in that country C. A positive balance of payments with that country D. A strong stock market rally in that countryWhich one of the factors is most likely to be associated with an increase in the US trade deficit: higher savings rate in the US O higher investment opportunity in the US O low spending rate, relative to income levels in the US O depreciation of the US dollar
- What is a long position in foreign exchange? Does a successful Long position mean the currency price becomes lower than what you bought it?1.Purchasing Power Parity (PPP) theory states that Which of the answers is incorrect? a . as the purchasing power of a currency sharply declines (due to hyperinflation) that currency will depreciate against stable currencies. b . the exchange rate between currencies of two countries should be equal to the ratio of the countries' price levels. c . the prices of standard commodity baskets in the two countries are not relatedExplain the International Fisher effect and Interest Rate Parity theories. If these theories exist, explain MNCs' justification to invest excess cash in foreign country. Present a situation in which investment in the foreign money market would provide a higher rate of return than the one offered at the home market.