When a Nation Realizes External Balance

question 12

Multiple Choice

When a nation realizes external balance

• A) it can have a current account deficit
• B) it can have a current account surplus
• C) it has neither a current account deficit nor a current account surplus
• D) Both a and b

Understand the concept of cost-volume-profit (CVP) analysis and its significance in decision-making.

Calculate and interpret the unit contribution margin and its role in CVP analysis.

Identify different methods for estimating cost behavior, including the high-low method and least-squares regression method.

Compute and understand the significance of the total contribution margin, contribution margin ratio, and margin of safety.

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Definitions:

Net Capital Outflow

The difference between a nation's total exports of physical assets and its total imports of physical assets within a given period.

Domestic Assets

Assets located within a country's borders, including both tangible and intangible assets owned by residents or entities, and contributing to the national economic value.

Trade Surplus

A situation where a country's exports exceed its imports over a given period, indicating a net inflow of domestic currency from foreign markets.

Foreign Direct Investment

Investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country.