A Ton of Scrap Iron Sells for $150 in the U.S

question 56

Multiple Choice

A ton of scrap iron sells for $150 in the U.S. and 1400 yuan in China. The nominal exchange rate is 6.7 yuan per dollar.

• A)A profit could be made by buying scrap iron in China and selling it in the U.S. This would tend to drive down the price of U.S. scrap iron.
• B)A profit could be made by buying scrap iron in China and selling it in the U.S. This would tend to drive down the price of Chinese scrap iron.
• C)A profit could be made by buying scrap iron in the U.S. and selling it in China. This would tend to drive down the price of U.S. scrap iron.
• D)A profit could be made by buying scrap iron in the U.S. and selling it in China. This would tend to drive down the price of Chinese scrap iron.

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Definitions:

Income Tax Collections

The process of collecting taxes imposed on individuals or entities based on their income or profits by the government.

National Income

A measure of the total value of all goods and services produced by a country over a specific time period, often adjusted for inflation and excluding net income from abroad.

Budget Deficit

A situation where a government's expenditures exceed its revenues, resulting in the need to borrow money to cover the shortfall.

Government Spending

All expenditures made by government agencies on goods, services, and projects to achieve economic and social goals.