If a French Company Exports $2 Million of Machinery to Italy

question 15

Multiple Choice

If a French company exports $2 million of machinery to Italy and French tourists spend $2 million at Italian beaches,the Italian current account balance ________,and the Italian financial account balance ________.

• A)rises; rises
• B)rises; is unchanged
• C)is unchanged; is unchanged
• D)is unchanged; rises

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Definitions:

Option to Cancel

A clause in a contract that allows one or more parties to terminate the agreement under certain conditions.

Legally Sufficient Consideration

refers to something of value or a promise exchanged between parties in a contract that is recognized by law as adequate to establish a binding agreement.

Preexisting Duty

An obligation that a party is already legally required to perform, which cannot serve as the basis for new consideration in a contract.

Sump Pump

A device used to remove accumulated water from a sump basin, commonly found in the basements of homes.