If an MNC sells a product in a foreign country and imports partially manufactured components needed for production to that country from the U.S., then the local economy's inflation will have:
A) a more pronounced impact on revenues than on costs.
B) a less pronounced impact on revenues than on costs.
C) the same impact on revenues as on costs.
D) none of the above

Question

Quizplus · Accepted Answer

The local economy's inflation will increase the prices of the final product, impacting revenues more than costs, as some costs are tied to imported components from the U.S. which may not be affected by local inflation.

If an MNC Sells a Product in a Foreign Country