According to the J-Curve, Following a Depreciation, the Current Account

question 14

Multiple Choice

According to the J-curve, following a depreciation, the current account has a tendency to become more _____ initially, and then _____.

• A) positive, improve
• B) positive, worsen
• C) negative, improve
• D) negative, worsen
• E) none of the above

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Definitions:

Straight-Line Depreciation

A method of depreciation where an equal amount of depreciation is allocated each year over the useful life of the asset.

Average Rate of Return

This financial ratio measures the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.

Estimated Annual Net Income

The projection or forecast of a company's net income over a one-year period, considering all expected revenues and expenses.

Straight-Line Depreciation

A method of allocating the cost of a physical asset evenly over its useful life.