Only purely domestic firms that buy all of their inputs and sell all of their outputs in their home countries are unaffected by events in international financial markets.

Question

Quizplus · Accepted Answer

Even purely domestic firms can be affected by events in international financial markets indirectly through changes in exchange rates, interest rates, and inflation rates. These factors can affect the domestic economy and have an impact on the pricing and availability of inputs and outputs. Additionally, changes in international financial markets can affect the domestic economic policies and regulations that impact purely domestic firms.

Only Purely Domestic Firms That Buy All of Their Inputs