If There Is a Current Account Surplus in the U

question 73

Multiple Choice

If there is a current account surplus in the U.S. balance of payments, then

• A) there will necessarily be a surplus in the financial account.
• B) the sum of deficit accounts exceeds the sum of surplus accounts in the current account.
• C) the sum of surplus accounts in the current account exceeds the sum of deficit accounts in the financial account.
• D) the net balance of the balance of payments will equal zero.
• E) the United States is a net debtor to the rest of the world.

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Definitions:

Unit Contribution Margin

The amount each unit sold contributes to covering fixed costs and generating profit, calculated by subtracting variable costs per unit from the selling price per unit.

Break-Even Point

The financial point at which total revenues equal total costs and expenses, resulting in no net loss or gain.

Fixed Costs

Costs that do not change with the level of production or sales activities, such as rent, salaries, and insurance.

Operating Leverage

A measure of how sensitive a company's operating income is to changes in revenue, indicating the degree to which fixed costs are utilized.