If a Nation Imports a Good That Can Be Domestically

question 127

Multiple Choice

If a nation imports a good that can be domestically produced,what happens to the quantity consumed of the good and why?

• A) The quantity consumed increases because the market price decreases.
• B) The quantity consumed decreases because the market price increases.
• C) The quantity consumed remains constant because the price is unchanged.
• D) The quantity consumed increases because the nation produces more of the good.
• E) The quantity consumed decreases because the market price decreases.

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Definitions:

Cash Payments

Transactions in which payment for goods, services, or obligations is made in cash at the time of the transaction or shortly thereafter.

Financing Activities

Transactions involving external sources of funding, including equity, debt, dividends, and repayment of loans, that are reported in the cash flow statement.

Cash Dividends

payments made to shareholders out of a company’s profits, distributed as cash.

Increase in Income Taxes Payable

An accounting term referring to a rise in the amount of income taxes a company owes to the government, yet has not paid.