Fluctuating exchange rates can alter a multinational firm's profits and losses.The U.S.automobile manufacturer Tesla produces vehicles in the United States and sells them in Norway.(Norway is Tesla's largest overseas market.)If the dollar appreciates against the Norwegian krone,then Tesla's revenues from these operations should ________ and its profits from these operations should ________.

Question

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When the dollar appreciates against the Norwegian krone, it means that each dollar can buy more krones. Therefore, when Tesla converts its revenues from krones back to dollars, it will receive fewer dollars for the same amount of krones, leading to a fall in revenues. Additionally, the cost of Tesla's cars in krones would increase, potentially reducing sales in Norway, which could also lead to a fall in profits.

Fluctuating Exchange Rates Can Alter a Multinational Firm's Profits and Losses.The