Suppose Lufthansa Buys 10 Boeing 747s for $150 Million in 1991,financed

question 11

Multiple Choice

Suppose Lufthansa buys 10 Boeing 747s for $150 million in 1991,financed by a five year loan from the US Export Import Bank.There is a one-year grace period on principal and interest payments.The net impact of this sale in 1991 is

• A) a $150 million reduction in the U.S. trade deficit.
• B) a $150 million reduction in the U.S. capital account surplus.
• C) zero change in the U.S. balance of payments in 1991.
• D) all of the above.

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Definitions:

Output

In economics, the amount of goods or services produced by a business, industry, or economy.

Marginal Cost Curve

A graph that shows the cost of producing one more unit of a good or service at any given level of production.

Average Total Cost (ATC)

The total cost of production (fixed and variable costs combined) divided by the number of units produced, indicating the average expense per unit of output.