A U.S. automobile dealer has ordered a fleet of Japanese cars worth 10 million yen. The terms of payment is C.O.D. (cash on delivery). At the time the order was placed, the exchange rate was 100 yen per U.S. dollar. When the fleet arrived the exchange
rate had become 200 yen per U.S. dollar.
A) This change in the foreign exchange rate will hurt the U.S. importer.
B) This change in the foreign exchange rate will hurt the Japanese exporter.
C) This change in the foreign exchange rate will benefit the U.S. importer.
D) This change in the foreign exchange rate will benefit the Japanese exporter.
Answer: C
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Refer to the information provided in Figure 16.2 below to answer the question(s) that follow.
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