In studying various European countries to identify the one where Rinker Audio Products can manufacture and use as the base for a pan-Europe launch,the company found out that the country of Marunia changed its foreign exchange rate that resulted in a significant appreciation of the Marun,its local currency.Which of the following is a consequence of Marunia's change in exchange rate that results in appreciation of the local currency?

Question

Quizplus · Accepted Answer

An appreciation of the local currency means that the exports of Marunia become more expensive, making it less attractive as a manufacturing base. This may result in companies shifting their production to other countries with lower costs. Additionally, it may lead to a decrease in the competitiveness of Marunia's exports, which may ultimately reduce foreign investment in the country. Therefore, option C is the most appropriate choice. Option A is incorrect because an increase in foreign direct investment is unlikely in the event of an appreciation of the local currency. Option B is incorrect because an increase in currency value would result in an increase in export costs in dollar terms. Option D is incorrect because an appreciating currency typically makes a country more expensive, not less expensive. Option E is incorrect because an appreciation in the local currency may result in a decrease in imports, but it is not guaranteed.

In Studying Various European Countries to Identify the One Where