A Country Runs a Deficit in Its Current Account If

question 116

Multiple Choice

A country runs a deficit in its current account if:

• A)it consumes less goods and services compared to what it produces.
• B)the interest and dividends earned by its residents on foreign assets exceed the interest and dividends earned by foreigners who invest in domestic assets.
• C)it follows the double-entry bookkeeping requirement that total debits must equal total credits.
• D)foreign currency received from exports and transfers exceeds the foreign exchange needed to pay for imports and to make unilateral transfers.
• E)foreign currency received from exports and transfers is less than the foreign exchange needed to pay for imports and to make unilateral transfers.

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Definitions:

Restocking Costs

The expenses associated with replenishing inventory or stock.

Obsolescence

The process of becoming outdated or no longer used, often due to technological advancements.

Safety Stock

Additional inventory held by a company to prevent stockouts, typically used as a buffer against variability in demand or supply.

Replacement Order

This refers to the process of ordering new or additional equipment or parts to replace old or used ones in order to maintain operational efficiency.