Middle American Corp. (MAC) produces a line of corn silk cosmetics. All of the inputs are purchased domestically and processed at the factory in Iowa. Sales are only in the U.S.

a. Is there any sense in which MAC is exposed to the risk of foreign exchange rate changes that effect large MNCs? If yes, how could MAC protect itself from these risks?

b. If MAC opens a sales office in Paris, will its exposure to exchange rate risks increase? Explain.