If the Government Started with a Budget Deficit and Moved

question 79

Multiple Choice

If the government started with a budget deficit and moved to a surplus, which statement would best describe the effects of these changes?

• A) Domestic investment would rise, and the trade balance would move towards surplus.
• B) Domestic investment would rise, and the trade balance would move towards deficit.
• C) Domestic investment would fall, and the trade balance would move towards surplus.
• D) Domestic investment would fall, and the trade balance would move towards deficit.

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, including assets, liabilities, and shareholders' equity at a specific point in time.

Gross Profit Method

An inventory estimation technique that uses the historical gross profit margin to estimate the cost of goods sold and ending inventory.

Physically Counting

The manual process of counting inventory items one by one to verify the quantity on hand.

Current Assets

Assets that are expected to be converted into cash within one year or one business cycle.