Chapter 13, Problem 6QA

The rise of globalization is due to the many companies that have become multinational corporations for various reasons—for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well—for example, political risk and exchange rate risk.   Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates? Check all that apply. If a government intends to prevent its currency’s value from falling relative to other currencies, it will purchase its currency from sellers in the market. If the demand for a currency increases, the currency’s value will increase relative to other currencies. When a government limits imports and restricts foreign exchange transactions, its currency’s value tends…

Should firms require higher rates of return on foreign projects than on identical projectslocated at home? Explain.

Which of the following best represents the primary economic and financial benefit to the U.S. from NAFTA?   It led to increased tariffs on U.S. exports to Canada and Mexico.     U.S. consumers had access to a wider variety of products.     It resulted in the relocation of major U.S. corporations to Europe.    The U.S. benefited from low-price manufacturing, low-priced labor, and reduced shipping and logistics costs.