If Foreigners Become Unwilling to Hold U

question 40

Multiple Choice

If foreigners become unwilling to hold U.S. assets, the U.S. trade balance will:

• A)go further into deficit.
• B)go further into surplus.
• C)experience smaller deficits.
• D)experience smaller surpluses.

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Definitions:

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase proportionally.

Total Product Curve

A graphical representation showing how the total quantity of output changes with variation in the quantity of a single input, holding other inputs constant.

Marginal Returns

The additional output gained by adding one more unit of input, holding all other inputs constant.

Minimum Efficient Scale

The minimum efficient scale is the lowest point of production where a firm can achieve the economies of scale, reducing its cost per unit to the minimum.