In the Short Run, a Trade Deficit Allows More Consumption

question 126

Multiple Choice

In the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because the:

• A)country eventually will consume more and produce less.
• B)country eventually will sell all its financial assets to foreigners.
• C)domestic currency will appreciate.
• D)country eventually has to produce more than it consumes in order to pay foreigners their profits.

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Definitions:

CEOs

Chief Executive Officers, the highest-ranking executives in companies, responsible for making major corporate decisions, managing overall operations, and acting as the main point of communication between the board of directors and corporate operations.

Total Compensation

The complete reward package provided to an employee, including base salary, bonuses, benefits, and any other financial remunerations.

Confidence Interval

A range of values within which there is a specified probability that the true parameter value lies.

Confidence Interval

A range of values, derived from sample statistics, that is likely to contain the true population parameter.