A Trade Deficit Occurs When

question 67

Multiple Choice

A trade deficit occurs when

• A) government spending exceeds government revenue.
• B) government revenue exceeds government spending.
• C) exports equal imports.
• D) exports exceed imports.
• E) exports are less than imports.

---

Definitions:

Profit Maximizing

The process or strategy undertaken by businesses to achieve the highest possible profit, often entailing decisions on pricing, production, and cost management.

Loss-Minimizing Level

The production level at which a firm minimizes its losses in the short run when it cannot cover total costs, but can cover variable costs.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Variable Cost

Costs that change in proportion to the good or service that a business produces.