A Firm Produces Products for Which Substitute Products Are Produced

Multiple Choice

A firm produces products for which substitute products are produced in all countries. Appreciation of the firm's local currency should:

A) increase local sales as it reduces foreign competition in local markets.
B) increase the firm's exports denominated in the local currency.
C) increase the returns earned on the firm's foreign bank deposits.
D) increase the firm's cash outflow required to pay for imported supplies denominated in a foreign currency.
E) None of these are correct.