Final answer:
The statement about rigid cost-plus pricing is false, as it does not adjust for market conditions outside the home country. Price cap regulation can be challenging if external costs rise significantly. Anti-dumping complaints can lead to protectionist measures like tariffs or import quotas.
Step-by-step explanation:
The statement is False. Companies using "rigid cost-plus pricing" do not set prices with adjustments to reflect market conditions outside the home country. "Rigid cost-plus pricing" means adding a standard markup to the cost of the products, without considering market changes or external factors. Conversely, when market conditions dramatically change, such as a significant rise in energy prices, companies may face difficulties adhering to price cap regulations, as the costs may exceed the price caps that were considered reasonable previously.
For a company that built a factory, the depreciation of the factory could be included in this year's cost of production. However, the measurement of the true cost of production can be challenging in countries with government-controlled prices. Additionally, when domestic industries claim unfair dumping, governments sometimes use anti-dumping complaints as a pretext to implement protectionist measures like tariffs or import quotas.
Regarding exchange rate policies, a country with a large fraction of GDP made up of imports and exports may opt for either a flexible or fixed exchange rate. This depends on various economic factors specific to the country in question. For instance, a flexible exchange rate can accommodate changing market conditions and trade volumes, while a fixed exchange rate can provide stability for trading partners and domestic businesses. Ultimately, the choice would be informed by the country's economic objectives and the behavior of its trading partners.