Assuming There Is a Burden from a Current Account Deficit

question 95

Multiple Choice

Assuming there is a burden from a current account deficit, that burden would have the least impact on a country if the current account deficit is used to finance

• A) unemployment compensation benefits.
• B) Social Security benefits.
• C) expenditures on food and recreation.
• D) investment in plant and equipment.

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Definitions:

Identical Firms

Companies in a market that offer products or services that are exactly the same in terms of quality, performance, and price.

Average Variable Cost

The variable cost per unit of output, calculated by dividing total variable costs by the total output.

Total Fixed Costs

The total of all expenses that do not change with the amount of production or level of business operations.

Equilibrium Level

The state in which market supply and demand balance each other, resulting in stable prices.