Which of the Following Would Contribute, Directly or Indirectly, to a Deficit

question 214

Multiple Choice

Which of the following would contribute, directly or indirectly, to a deficit in the capital account of the U.S.balance of payments?

• A)A British citizen buys stock in Ford.
• B)A British citizen buys a bond from Ford.
• C)Interest rates fall in the United States relative to their level in the rest of the world.
• D)Australian publisher Rupert Murdoch buys The New York Times.
• E)Developing countries become more stable and so borrow less from U.S.banks.

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Definitions:

Technically Insolvent

A situation where an entity's liabilities exceed its assets, indicating it cannot currently meet its debt obligations with its available assets.

Firm's Assets

All the resources owned by a company, including cash, investments, property, and inventory, that have value and can be used to meet its financial obligations.

Firm's Debt

The total liabilities or financial obligations incurred by a company to finance its business operations and growth.

Technically Insolvent

A situation where a company cannot meet its short-term financial obligations even though its total assets may exceed its total liabilities.