Which of the Following Statements Is Correct for an Open

question 108

Multiple Choice

Which of the following statements is correct for an open economy with a trade surplus?

• A)The trade surplus cannot last for very many years.
• B)The trade surplus must be offset by negative net capital outflow.
• C)The trade surplus implies that the country's national saving is greater than domestic investment.
• D)None of the above is correct.

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Definitions:

Cash Dividend

A payment made by a company out of its earnings to shareholders, usually in cash.

Stock Dividend

A payment to shareholders in the form of additional shares rather than cash, reflecting a company's earnings.

Sold Below Cost

The act of selling a product for less than its production or acquisition cost, typically to clear inventory or meet competitive pricing.

Treasury Stock

Equity that was once distributed to the public and later purchased again by the issuer, diminishing the total shares in circulation.