Suppose that Mickey's Clothing moved its operations out of Korea and into China because of the lower wages in China. Now, the wages in Korea are such that it would be cheaper to manufacture the clothes in Korea than it is in China. This is an example of:

Question

Quizplus · Accepted Answer

Economic exposure refers to the risk that a company's cash flow, foreign investments, and earnings may suffer as a result of fluctuating foreign currency exchange rates. In this scenario, Mickey's Clothing's decision to move operations due to changes in relative wage levels between countries is an example of how changes in economic conditions can affect a company's financial performance, which is a form of economic exposure.

Suppose That Mickey's Clothing Moved Its Operations Out of Korea