Difference between transaction and economic exposure with the comparison chart
Answers
The two types of welfare are intermitted and are rather difficult to separate from each other, nevertheless. Prof. Pigou has distinguished economic welfare (from non- economic welfare) as “that part of social welfare that can be brought directly or indirectly into relation with the measuring rood of money.” Thus, according to Pigou, economic welfare is the part of total welfare, which can be expressed in monetary terms directly or indirectly, non- economic welfare, on the contrary, is that part of total welfare which is not amenable to money-measurement.
Answer:
'Transaction vs Economic Exposure' is equivalent to comparing short term vs. long-term impact on cash flow changes due to forex fluctuations in the market. Future receivables or payables in foreign currency drive transaction risk. On the other hand, future currency cash inflows /outflows drive economic exposure.