The exchange rate is part of the cost of product paid by an importing firm.

Question

Quizplus · Accepted Answer

When an importing firm purchases goods from a foreign country, they need to pay for that product in the currency of the exporting country. The exchange rate is the rate at which one currency can be exchanged for another. Therefore, the exchange rate affects the cost of the product in the importing firm's currency. A higher exchange rate means that the product will cost more in the importing country's currency, while a lower exchange rate means that the product will cost less. So, the exchange rate is indeed part of the cost of product paid by an importing firm.

The Exchange Rate Is Part of the Cost of Product