U.S.corporations have been pouring investments into China to build manufacturing facilities to produce goods for the local and export markets.Since economists expect the Chinese yuan to appreciate against the dollar in the future,the forthcoming Chinese yuan profits of U.S.MNEs when converted to U.S.dollars will be high.This is an example of U.S.companies cutting costs by _____.

Question

Quizplus · Accepted Answer

U.S. corporations are cutting costs by reacting to exchange rate movements, specifically the expected appreciation of the Chinese yuan against the U.S. dollar. By investing in China now and earning profits in yuan, these companies will benefit from the appreciation of the yuan when they convert their profits back to dollars in the future. This is a strategic move to reduce costs and increase profits.

USCorporations Have Been Pouring Investments into China to Build Manufacturing