How Is America's Trade Deficit Primarily Financed

question 60

Multiple Choice

How is America's trade deficit primarily financed?

• A) overseas borrowing
• B) public purchases of U.S. bonds
• C) budget surplus funds
• D) corporate taxes
• E) excise taxes

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Definitions:

Spreading Effect

The financial strategy of distributing investments across various assets to reduce risk and potentially increase returns.

Fixed Cost

Costs that do not vary with the level of output or activity.

Output

The aggregate production of either goods or services by an organization, commercial sector, or the economy as a whole.

Diminishing Returns Effect

A principle in economics where increasing one factor of production, while keeping others constant, will at some point yield lower per-unit returns.