If Net Exports Are Negative

question 46

Multiple Choice

If net exports are negative,

• A)net foreign investment is also negative.
• B)capital inflows must be less than capital outflows.
• C)net foreign investment must be greater than public saving.
• D)net foreign investment is positive.
• E)Both A and B are correct.

---

Definitions:

Flotation Costs

Costs associated with a company issuing new securities, such as fees for underwriting, legal assistance, and registration.

Cost of Capital

The essential profit rate that companies need to hit on their investments to uphold their value in the market and attract capital.

Capital Budgeting

The process a business undertakes to evaluate and select long-term investments that are consistent with the firm's goal of wealth maximization.