Which of the Following Undesirable Results Will Most Likely Occur

question 85

Multiple Choice

Which of the following undesirable results will most likely occur for a country running a favorable balance of trade?

• A)higher unemployment
• B)higher domestic interest rates
• C)fewer funds to invest abroad
• D)granting credit that may be risky

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Definitions:

Net Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health of a company.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.

Du Pont Equation

A formula that breaks down the Return on Equity (ROE) into three key components: profit margin, asset turnover, and financial leverage, allowing for a deeper analysis of what drives a company's ROE.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.