Which of the Following Correctly Describes the Relationship Between Savings,the

question 8

Multiple Choice

Which of the following correctly describes the relationship between savings,the government budget balance,and the current account?

• A)Private savings plus the government budget balance must equal private investment plus the current account.
• B)Private savings plus the current account must equal private investment plus the government budget surplus or deficit.
• C)Private savings plus private investment must equal the current account plus the government budget balance.
• D)Private investment must equal private savings plus the current account minus the government budget balance.

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Definitions:

Marketable Securities

Financial instruments that can be easily converted to cash, such as stocks, bonds, and Treasury bills.

Earnings Per Share

A metric used to measure a company’s profitability, calculated as the company's net profit divided by the number of outstanding shares.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenues.

Common Shares Outstanding

The total number of shares of common stock that are issued and actively held by shareholders, excluding treasury shares.