The Trade Deficit Is the Mirror Image of the Required

question 184

Multiple Choice

The trade deficit is the mirror image of the required capital inflows.So why worry about these capital inflows?

• A)Trade deficits automatically cause larger budget deficits.
• B)Before long, the Germans, Japanese, and other foreigners will own the United States and will be dictating policy to the U.S.government.
• C)These capital inflows create debts on which interest and principal payments will have to be made in the future.
• D)During the period of trade deficits, personal consumption must be reduced to build up wealth to repay the debt created.

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Definitions:

Conversion Costs

Costs incurred in the process of converting raw materials into finished products, typically including direct labor and manufacturing overhead.

Assembly Labor's Wages

The earnings provided to employees who work specifically in assembling parts or products in a manufacturing process.

Raw Lumber

Unprocessed wood used as a base material in construction and manufacturing, typically sold in bulk or by the board foot.

Materials Cost Per Unit

The total cost of materials required to produce a single unit of product, including direct and sometimes indirect materials.