If a Country Is Running a Trade Deficit This Year

question 49

Multiple Choice

If a country is running a trade deficit this year, it must pay for these goods by ________.

• A) selling financial assets
• B) running a trade surplus in the future
• C) selling government debt to foreign institutions
• D) All of these answers are correct.
• E) None of these answers are correct.

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Definitions:

Added Profit

The additional profit gained from making changes to the production process or selling strategy, beyond the usual or expected profit levels.

Fast-Second Strategy

An approach by a dominant firm in which it allows other firms in its industry to bear the risk of innovation and then quickly becomes the second firm to offer any successful new product or adopt any improved production process.

Dominant Firm

A company with a large market share that has the power to influence the price and terms in its industry or market.

Innovations

The process of creating new methods, ideas, or products that bring about significant improvements or advancements.