If a US Corporation Sells a Product in Europe and Uses the Uses

question 120

Multiple Choice

If a U.S. corporation sells a product in Europe and uses the proceeds to purchase shares in a European corporation, then U.S. net exports ______ and net capital outflows ______.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), representing the profit a company makes from its core operations.

Capacity

The maximum amount of work that an organization is capable of completing in a given period of time.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Unsold Units

Inventory items that have been produced or acquired but have not yet been sold to customers.