Which of the Following Statements Is TRUE About the Historical

question 49

Multiple Choice

Which of the following statements is TRUE about the historical relationship between the trade deficits and government budget deficits?

• A) There is no relationship between trade deficits and budget deficits.
• B) There is a positive relationship between trade deficits and budget deficits.
• C) There is a negative relationship between trade deficits and budget deficits.
• D) A relationship exists only when there is a balanced budget.

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Definitions:

Average Operating Assets

The average value of those assets used for the normal operation of a company over a specific period, often used in return on investment calculations.

Net Operating Income

The total profit of a company after operating expenses are subtracted from gross income.

Residual Income

The income that remains after subtracting all required costs of capital from operating income.

Average Operating Assets

The average value of the assets used in the normal operation of a business to generate revenue, calculated typically over a fiscal year.