Which of the Following Statements Is Incorrect for an Open

question 38

Multiple Choice

Which of the following statements is incorrect for an open economy?

• A)A country can have a trade deficit, trade surplus, or balanced trade.
• B)A country that has a trade deficit has positive net capital outflow.
• C)Net exports must equal net capital outflow.
• D)National saving must equal domestic investment plus net capital outflow.

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Definitions:

LIFO Method

An inventory valuation method where the last items produced or bought are the first ones to be expensed, leading to lower reported profits and taxes when prices are rising.

Periodic System

An accounting system where updates to inventory levels and costs of goods sold are made at the end of an accounting period rather than being tracked continuously.

Ending Inventory

The total value of all inventory, including products that are partially or fully completed, that is still on hand at the end of an accounting period.

Net Realizable Value

The estimated selling price of an asset in the ordinary course of business, minus any costs associated with its sale or disposal.