An Externality Is

question 15

Multiple Choice

An externality is:

• A) always a benefit to the recipient.
• B) always a detriment to the recipient.
• C) an activity that occurs in a business which is unknown to management.
• D) unintended benefits or costs imposed on third parties as a result of economic activity.
• E) an act, caused by a firm located in this country, which has an effect on a person in a foreign country.

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Definitions:

Trade Deficit

An economic condition that occurs when a country imports more goods and services than it exports.

Exports

Goods or services produced in one country and sold to buyers in another country, contributing to the selling country's economy.

Imports

Goods or services brought into one country from another for sale or use.

Trade Deficit

A situation in which a country's imports of goods and services exceed its exports, resulting in a negative balance of trade.