Were there no exchange rate system in place, what complications would arise if a Saudi Arabian company sold a product to consumers in the United States?

Question

A.
The company would have to pay a higher import tariff.

B.
Consumers in the United States only use the United States dollar.

C.
Consumers would have difficulty determining the cost of the product.

D.
Domestic competition in Saudi Arabia would drive up the product's price.

Answer 1

The correct answer is C. Consumers would have difficulty determining the cost of the product.

If there were no exchange rate system in place, a Saudi Arabian company selling a product to consumers in the United States would face complications. One of the main complications would be that consumers in the United States would have difficulty determining the cost of the product. This is because there would be no fixed exchange rate between the Saudi Arabian Riyal and the United States dollar, making it challenging for consumers to understand the exact price they would be paying for the product in their own currency.