Consider an Increase in a Country's Current Account Deficit

question 33

Multiple Choice

Consider an increase in a country's current account deficit.Which of the following statements best describes the desirability of this change?

• A)It is desirable regardless of the cause of the change.
• B)It is undesirable regardless of the cause of the change.
• C)It is not desirable if it is caused by an increase in domestic investment.
• D)It might be desirable depending on the cause of the change.
• E)It is desirable if it is caused by a reduction in the level of private saving.

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Definitions:

Net Operating Income

A measure of a company’s profitability, calculated as revenues less operating expenses excluding taxes and interest.

Traceable Fixed Expense

A fixed cost that can be directly linked to a specific segment of the business and would be eliminated if the segment ceased operations.

Percentage Change

A calculation that shows how much a quantity has increased or decreased in percentage terms over a period.

Traceable Fixed Expense

Fixed costs that can be directly associated with a specific product, department, or segment of a business.