Quiz March 9, 2023
Question 1
You are a Japanese company exporting very specialized electronic components to the United
States. You always request your customers to pay in yen and you offer a 3 months credit. Your
products are recognized as the best. So, you target the high end of the market, and you can sell
with a high premium. You believe there is a high probability the yen devaluates by 10% in the
following year. Do you think that you should continue with your current payment strategy? If
you think changes may be necessary, what do you think would be the possible options?
In my opinion, I believe that we should continue with this current payment strategy, even with
the potential devaluation of the yen. the products are of the highest quality and are recognized as
such, so I am confident that our customers should continue to pay in yen in order to retain them.
However, the best case scenario is to ask our buys to pay in USD rather than yen to increase
revenue overall.
Question 2
You are a country suffering from high inflation and instability of its currency towards the main
currencies used internationally. You are thinking about pegging your currency to the $ or to
another internationally recognized currency. What could be the advantages of doing so, but what
could also be the drawback of this monetary strategy?
Pegging a currency to the US Dollar or another internationally recognized currency can have
both advantages and drawbacks. The main advantage of pegging a currency is that it can help to
stabilize the exchange rate and reduce inflation. This can help to attract foreign investment and
increase economic growth. However, there are also drawbacks to this strategy are that pegging a
currency can limit the ability of a country to pursue independent monetary policy, and it can also
lead to a loss of competitiveness in the global market.