The extent to which a foreign company changes dollar prices of its products in the U.S.market as a result of exchange rate fluctuations is called:
A)hedging.
B)exchange rate pass-through.
C)a target exchange rate.
D)factoring.
E)inflation-proofing.

Question

Quizplus · Accepted Answer

Exchange rate pass-through refers to the extent to which the prices of imported goods are affected by changes in the exchange rate. When a foreign company adjusts its dollar prices in the U.S. market due to exchange rate fluctuations, it is engaging in exchange rate pass-through. This can affect the competitiveness of products and the purchasing decisions of consumers.

The Extent to Which a Foreign Company Changes Dollar Prices