Assume a U.S.-based MNC has a Chilean subsidiary that annually remits 30 million Chilean pesos to the United States. If the peso ____, the dollar amount of remitted funds ____.
A)appreciates; decreases
B)depreciates; is unaffected
C)appreciates; is unaffected
D)depreciates; decreases
E)B and C

Question

Quizplus · Accepted Answer

If the Chilean peso depreciates, it means that it loses value against the U.S. dollar, which will result in fewer dollars being received for the same amount of pesos. Therefore, the dollar amount of remitted funds decreases.