Assume that a Japanese car manufacturer exports cars to U.S. dealerships, which are priced in yen. The demand for those cars declines when the yen is strong. The manufacturer also produces some cars in the U.S. with U.S. materials and those cars are priced in dollars. The manufacturer could reduce its economic exposure by:
a. closing down most of its plants in the U.S.
b. producing more automobiles in the U.S.
c. relying completely on Japanese suppliers for its parts.
d. pricing its exports in dollars.
b. producing more automobiles in the U.S.
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