The Current Account Surplus Is

question 31

Multiple Choice

The current account surplus is

• A) an increasing function of disposable income and an increasing function of the real exchange rate.
• B) a decreasing function of disposable income and a decreasing function of the real exchange rate.
• C) a decreasing function of disposable income and an increasing function of the real exchange rate.
• D) only a decreasing function of disposable income.
• E) only an increasing function of the real exchange rate.

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Definitions:

Variable Expenses

Expenses that directly correlate and adjust with the alterations in the amount of activity or the quantity of production.

Fixed Expenses

These are costs that do not fluctuate with the level of production or sales, such as rent, salaries, and insurance.

Margin of Safety

The difference between actual sales and sales at the breakeven point, indicating how much sales can decline before a loss occurs.

Variable Expenses

Costs that change in proportion to the activity or volume of a business operation.