A Country Has a Trade Deficit

question 120

Multiple Choice

A country has a trade deficit.Which of the following must also be true?

• A)net capital outflow is positive and domestic investment is larger than saving
• B)net capital outflow is positive and saving is larger than domestic investment
• C)net capital outflow is negative and domestic investment is larger than saving
• D)net capital outflow is negative and saving is larger than domestic investment

---

Definitions:

Variable Cost

relates to expenses that vary directly with the level of production or business activity, such as raw materials and labor costs.

Contribution Margin

The selling price per unit minus the variable cost per unit, used to cover fixed costs and to generate profit.

Operating Cash Flow

denotes the cash generated from a company’s normal business operations, indicating whether a company can maintain and grow its operations.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project.