An Increase in the Terms of Trade

question 59

Multiple Choice

An increase in the terms of trade:

• A)reduces real GDP.
• B)decreases consumption.
• C)increases real national saving if the change in terms of trade is less than fully permanent.
• D)all of the above.

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Definitions:

LIFO Reserve

The difference in inventory valuation between the Last In, First Out (LIFO) method and another inventory accounting method, such as FIFO (First In, First Out).

FIFO Amounts

The value of inventory computed under the First-In, First-Out method, assuming the items purchased or manufactured first are sold first.

Pretax Income

Pretax income is a company's earnings before tax, calculated as revenue minus expenses, excluding tax expenses, serving as an indicator of financial performance.

Beginning Inventory

The value of goods available for sale at the start of an accounting period, carried over from the end of the previous period.