Why Should the Recorded U.S.­Chinese Bilateral Trade

question 1

Multiple Choice

Why should the recorded U.S.­Chinese bilateral trade
Deficit in goods be interpreted with some caution?

• A)U.S.imports of Chinese products may be produced by U.S.subsidiaries that generate profits for the U.S.parent
• Firms (recorded as U.S.service export income).
• B)U.S.imports of Chinese products may utilize material inputs that China imports from the United States.
• C)U.S.imports of Chinese products may be produced with capital goods (e.g., machinery) that China imports from
• The United States.
• D)All of these are reasons for a cautious interpretation of the U.S.­Chinese bilateral trade balance.

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Definitions:

Taxable Income

The portion of an individual's or entity's income used to determine how much tax is owed to the government in a specific period.

Progressive

A tax system where the tax rate increases as the taxable amount increases, often aimed at achieving a more equitable distribution of income.

Proportional

A relationship where two quantities increase or decrease at the same rate, maintaining a constant ratio.

Regressive

Refers to a tax system where the tax rate decreases as the taxable amount increases, often placing a higher burden on lower-income earners.