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Question 13 If the Korean won appreciates against the US dollar while the Chinese yuan depreciates...

Question 13 If the Korean won appreciates against the US dollar while the Chinese yuan depreciates against the US dollar, which of the following is true?

a. Chinese exporters can increase American sales by shifting operations from their Korean subsidiaries to China.

b. Korean exporters can increase American sales by shifting operations from their Chinese subsidiaries to Korea.

c. American exporters can increase sales to China by shifting operations from Chinese subsidiaries to American subsidiaries.

d.Korean exporters can increase American sales by shifting operations from their Chinese subsidiaries to Korean AND American exporters can increase sales to China by shifting operations from Chinese subsidiaries to American subsidiaries.

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Answer #1

As Chinese Yuan depreciates against the US dollar , this will be advantageous to Chinese exporters to export from China as they now earn more Yuan for every dollar worth of goods. On the other hand it will be disadvantageous for the these exporters to remain in Korea as korean currency appreciation will negatively impact the earnings there.

Answer is a. Chinese exporters can increase American sales by shifting operations from their Korean subsidiaries to China.

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