When Current Account Deficits Are Used to Finance Investment Spending,such

question 13

Multiple Choice

When current account deficits are used to finance investment spending,such deficits may be self-correcting because

• A) they promote more responsible government policies.
• B) the resulting increase in the capital stock over time shifts the output supply curve to the right.
• C) the resulting increase in the capital stock over time shifts the output demand curve to the right.
• D) the resulting increase in national indebtedness increases labor demand.

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Definitions:

Cash

Money in the form of currency, which includes banknotes and coins, representing a medium of exchange for the purchase of goods or services.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the ownership interest of the shareholders.

Paid-In Capital

The amount of capital "paid in" by investors during common or preferred stock issuances, including the par value of the shares and any amount paid in excess.