A Country Runs a Deficit in Its Current Account If

question 116

Multiple Choice

A country runs a deficit in its current account if:

• A)it consumes less goods and services compared to what it produces.
• B)the interest and dividends earned by its residents on foreign assets exceed the interest and dividends earned by foreigners who invest in domestic assets.
• C)it follows the double-entry bookkeeping requirement that total debits must equal total credits.
• D)foreign currency received from exports and transfers exceeds the foreign exchange needed to pay for imports and to make unilateral transfers.
• E)foreign currency received from exports and transfers is less than the foreign exchange needed to pay for imports and to make unilateral transfers.

---

Definitions:

Activity Rate

The predefined cost-driver rate used in Activity-Based Costing to allocate overhead costs to products or services, based on each activity’s usage by those products or services.

Activity Cost Pool

A collection of overhead costs attributed to particular activities, used in activity-based costing to allocate costs more accurately to products or services.

Activity-Based Costing

A costing method that assigns costs to products and services based on the activities and resources that go into producing them, aiming to provide more accurate cost information.

Overhead

General business expenses that are not directly tied to specific products or services but are necessary for the overall operation of a business, such as rent, utilities, and administrative costs.