A Country Sells More to People Overseas Than It Buys

question 177

Multiple Choice

A country sells more to people overseas than it buys from them. Which of the following correctly identifies the effects of these transactions?

• A)The country will have a trade surplus and positive net exports.
• B)The country will have a trade surplus and negative net exports.
• C)The country will have a trade deficit and positive net exports.
• D)The country will have a trade deficit and negative net exports.

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Definitions:

Pretax Net Income

The amount of income that a company has earned before any taxes have been deducted.

CVP Analysis

Cost-Volume-Profit Analysis, a financial tool used to determine how changes in cost and volume affect a company's operating income and net income.

Pre-Tax Net Income

The income earned by a business before the deduction of tax expenses.

Variable Costs

Expenses that change in proportion to the activity of a business, such as the cost of raw materials.