If a Country Allows Trade And, for a Certain Good

question 33

Multiple Choice

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

• A) the country will be an exporter of the good.
• B) the country will be an importer of the good.
• C) the country will be neither an exporter nor an importer of the good.
• D) Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

---

Definitions:

Earnings and Profits

A tax term referring to the net income of a company with adjustments for certain tax-related items; crucial for determining how distributions to shareholders are taxed.

FMV

Fair Market Value; the estimated price at which an asset would trade in a competitive auction setting.

Nontaxable Return

A financial return or distribution that is exempt from taxes, such as certain gifts or inheritances.

Fiscal Year-End

The end of a 12-month period used for accounting purposes and preparing financial statements, not necessarily aligning with the calendar year.