What term refers to costs incurred from exchanging currencies when trading internationally?

• A. Tariffs
• B. Quotas
• C. Transaction Costs
• D. Excise Duties

Answer: (C)

Transaction costs are the charges that come with carrying out a trade across borders, including the costs of exchanging currencies. When a business buys from or sells to another country, money often has to be converted from one currency to another, and banks or payment providers may apply fees and use different exchange rates (the spread). These currency-exchange costs affect the overall cost of the transaction and can influence pricing and profitability.

This differs from tariffs (import duties on goods), quotas (limits on how much can be imported), or excise duties (taxes on specific goods like alcohol or tobacco), which are policy or tax-related charges rather than costs tied to the act of exchanging currencies.