Under the Simplifying Assumption Made in the Text, a Current

question 173

Multiple Choice

Under the simplifying assumption made in the text, a current account deficit exists when

• A) net exports are positive.
• B) financial flows out of a country for goods and services is less than financial flows into the country for its goods and services.
• C) a country has a trade deficit.
• D) an economy buys less from foreigners than it sells to them.

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment's value is adjusted to reflect the investor's share of the company's post-acquisition earnings or losses.

Gross Profit

The difference between revenue and the cost of goods sold, before deducting overheads, salaries, and other operating expenses.