If US Imports Increase, the Sum of the Balance of Payments

question 282

Multiple Choice

If U.S. imports increase, the sum of the balance of payments accounts (the sum of the current account plus capital and financial account plus official settlements account)

• A) becomes negative.
• B) becomes positive.
• C) becomes negative or positive depending on the government budget deficit or surplus.
• D) does not change.

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Definitions:

Marginal Cost

The increase in total production costs that arises from producing an additional unit of a good or service.

Ideal

A concept or standard of perfection or excellence that serves as a benchmark or goal.

Price Takers

Entities in a market that accept prevailing prices for goods or services, lacking the market power to influence prices on their own.

Market

An abstract concept encompassing the forces of demand and supply and the interaction of buyers and sellers with the potential for exchange to occur.