If Domestic Income Falls, What Must Happen to Keep the Trade

question 99

Multiple Choice

If domestic income falls, what must happen to keep the trade balance the same?

• A) The real exchange rate must fall.
• B) Foreign income must rise.
• C) The domestic price level must fall.
• D) Domestic income must fall.

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Definitions:

Beginning Inventory

The value of goods available for sale at the start of an accounting period, prior to any purchases or sales being recorded.

Ending Inventory

The value or volume of inventory remaining at the end of an accounting period after sales and adjustments.

Average Inventory

The mean stock held by a company over a certain period, calculated by adding the beginning and ending inventory and then dividing by two.

Beginning Inventory

The value of all goods held for sale by a company at the start of an accounting period.