Fluctuating exchange rates can alter a multinational firm's profits and losses.German auto maker Volkswagen produces automobiles in Germany and sells them in the United States.If the dollar depreciates against the euro,then Volkswagen's revenues from these operations should ________ because it will take ________ U.S.dollars to purchase the German-made Volkswagens.

Question

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If the dollar depreciates against the euro, it means the dollar is weaker compared to the euro. Therefore, it will take more U.S. dollars to purchase the same amount of euros, making German-made Volkswagens more expensive in the U.S. This would likely lead to a decrease in Volkswagen's revenues from U.S. sales.

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