Those Who Say the Growing Current Account Deficit in the United

question 9

Multiple Choice

Those who say the growing current account deficit in the United States is a significant problem make the argument that:

• A) the United States is financing current expenditures by borrowing from foreigners and these debts will ultimately have to be paid off.
• B) the United States is investing too much in other countries and not enough domestically.
• C) the large current account deficit will only lead to a depreciation of the U.S.dollar,hence hurt domestic exporters.
• D) lower investment in the United States as a result of the current account deficit will ultimately lead to decreases in wealth and economic growth in the United States.

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Definitions:

Consolidation

The process of combining the financial statements of several subsidiary companies into the statements of a single parent company, displaying the group's total financial status as a single entity.

Cost Method

An accounting method used to value an investment, where the investment is recorded at its cost and adjustments are only made when there are declines in value or realized returns.

Equity in Earnings

The share of the profits or losses from investments in associates that a company accounts for using the equity method.

FVTPL

Fair Value Through Profit or Loss, a classification under International Financial Reporting Standards for financial assets held for trading or designated upon initial recognition as measured at fair value, with changes in fair value recognized in profit or loss.