An Example of a Transaction That Will Be a Surplus

question 57

Multiple Choice

An example of a transaction that will be a surplus item on the U.S. balance of payments is

• A) a U.S. resident purchasing French wine.
• B) a French subsidiary's plant in New Jersey purchasing parts from the main plant in Paris.
• C) a gift of wheat from the U.S. government to India.
• D) a tourist from Germany buying a ticket to fly from New York to Chicago on American Airlines.

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Definitions:

Social Regulation

The imposition of rules and standards by government aimed at improving or protecting societal welfare, covering areas like environment, health, and safety.

Allocative Efficiency

A state of resource allocation where it is impossible to make any one individual better off without making at least one individual worse off.

Antitrust Laws

Regulations designed to promote competition and prevent monopolies by prohibiting business practices that restrict or control market competition.

Monopoly Power

The ability of a single seller or firm to influence and control the market price and total supply of a product or service, to the exclusion of competing firms.