Question

According to the text, relative changes in wage rates among nations may cause the multinational firm to

A. choose new exchange rates.
B. reduce the number of workers.
C. change its sources of supply from one country to another.
D. install labor-saving machinery.
E. eliminate product lines.

Answer 1

Relative changes in wage rates among nations may cause the multinational firm to change its sources of supply from one country to another.

Step-by-step explanation:

Relative changes in wage rates among nations can cause a multinational firm to change its sources of supply from one country to another.

For example, if the wage rates in Country A increase relative to the wage rates in Country B, it may be more cost-effective for the multinational firm to shift its production or sourcing from Country A to Country B, where the lower wages can result in lower production costs.

This shift in sourcing can help the multinational firm maintain its competitiveness and profitability in the global market.