Even though contracts are often fixed in the short run, as time passes, prices and costs can be changed to reflect the new competitive realities caused by a change in exchange rates.

Question

Quizplus · Accepted Answer

Exchange rate changes can impact the competitiveness of businesses, which may cause them to adjust their prices and costs over time. While contracts may be fixed in the short run, businesses still have the ability to adapt to changing market conditions.

Even Though Contracts Are Often Fixed in the Short Run