Question

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?

A. Exchange rate shifts can produce sometimes favorable and sometimes unfavorable effects on a company's competitiveness.
B. 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.
C. Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries that the goods are being exported to.
D. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets.
E. Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Answer 1

Answer: B. 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.

Step-by-step explanation:

Question meant to ask which statement is not true.

Domestic countries that are under pressure as a result of imports being cheaper are actually benefitted when their local currency becomes weaker than that of the country where the imported goods are acquired.

This is because, a weaker domestic currency means that the imports will become more expensive as they are denominated in the foreign currency which is now stronger. As the imports become more expensive, people will move towards the domestic companies instead of imports.