The Main Reason Our Current Account Deficit Is So Large

question 75

Multiple Choice

The main reason our current account deficit is so large is that

• A)we are running huge merchandise trade deficits.
• B)we are running huge federal budget deficits.
• C)we are allowing too much foreign investment in the United States.
• D)we are investing too much abroad.

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Definitions:

Calculate Exchange Gain/Loss

The process of determining the profit or loss from foreign exchange transactions, based on changes in exchange rates.

Monetary Items

Financial elements that are fixed or determinable in terms of money and do not change in value over time, such as cash and receivables.

Temporal Method

An accounting method used to convert the financial statements of a foreign subsidiary, using exchange rates based on the time assets and liabilities were acquired.

Functional Currency

The currency of the primary economic environment in which an entity operates, used in its financial reporting.