In the 1980s, the U

question 80

Multiple Choice

In the 1980s, the U.S.current account deficit was financed by:

• A)large outflows of domestic capital to other countries.
• B)large inflows of capital from private foreign investment in the United States.
• C)loans made by U.S.residents to the government.
• D)large inflows of foreign government capital.
• E)the Tax Reform Act of 1986, which increased income taxes for the wealthy.

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Definitions:

Price-Earnings Ratio

A valuation metric comparing a company’s current share price to its per-share earnings, indicating the market's expectations of growth.

Earnings Per Share

A financial metric calculated by dividing the net earnings available to common shareholders by the average outstanding shares.

Closing Price

The final price at which a security is traded on a given trading day, often used for performance assessment.

Default Risk Premium

The additional return that an investor demands for taking on the risk that the borrower may default on the loan.