ORIGINAL ANSWERS ONLY!

Transaction exposure is due only to international transactions by a firm. Economic exposure includes any form by which the firm's cash flow will be affected. Foreign competition may increase due to currency fluctuations. This could affect the firm's cash flow, but did not affect the value of any ongoing transactions. Thus, it represents a form of economic exposure but not transaction exposure. Transaction exposure is a subset of economic exposure. Consideration of all cash flows in a currency is not necessary when some inflows and outflows offset each other. Only net cash flows are necessary. Transaction exposure is due only to international transactions by a firm. Economic exposure includes any form by which the firm's cash flow will be affected. Foreign competition may increase due to currency fluctuations. This could affect the firm's cash flow, but did not affect the value of any ongoing transactions. Thus, it represents a form of economic exposure but not transaction exposure. Transaction exposure is a subset of economic exposure. Consideration of all cash flows in a currency is not necessary when some inflows and outflows offset each other. Only net cash flows are necessary