There Is No Reason to Worry About a Balance of Trade

question 140

Multiple Choice

There is no reason to worry about a balance of trade deficit if it is the result of an inflow of capital

• A)that is being channeled into productive investments.
• B)that will make it less costly to increase government spending on programs that will help incumbent legislators get re-elected.
• C)that is used to finance unemployment compensation benefits for a longer time period.
• D)that is used to finance a large budget deficit.

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Definitions:

Total Resource Cost

The overall expenses incurred in the production of goods or services, including raw materials, labor, and overhead costs.

Real Wages

Wages that have been adjusted for inflation, reflecting the actual purchasing power of income earned by workers.

Industrially Advanced Nations

Countries with highly developed economies, significant industrial production, and advanced technological infrastructure.

Long-run Trend

The long-run trend refers to the general pattern or direction that an economic variable, such as GDP growth or the unemployment rate, follows over a prolonged period, smoothing out short-term fluctuations.