An Increase in the Trade Surplus of a Small Open

question 72

Multiple Choice

An increase in the trade surplus of a small open economy could be the result of:

• A) a domestic tax cut.
• B) an increase in government spending.
• C) a decrease in the world interest rate.
• D) the implementation of an investment tax-credit provision.

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Definitions:

Avoidable Interest

Interest cost that a company can avoid if it does not undertake a project or an investment; typically considered in capital budgeting to assess potential savings.

Weighted Average

Weighted average is a calculation method where different values are given different levels of importance or weight, often used in inventory valuation or to average grades.

Economic Sacrifices Approach

A method in accounting that focuses on recognizing and measuring the sacrifices or costs that a company incurs in the process of generating revenue.

Input Market

The market in which firms purchase raw materials, labor, services, and other inputs necessary for the production of goods or services.