In a Small Open Economy, If Exports Equal $5 Billion

question 62

Multiple Choice

In a small open economy, if exports equal $5 billion and imports equal $7 billion, then there is a trade ______ and ______ net capital outflow.

• A) deficit; negative
• B) surplus; negative
• C) deficit; positive
• D) surplus; positive

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Definitions:

Preferred Stock

A category of corporate ownership that holds a superior right over the company's assets and profits compared to common stock.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date.

Preferred Stocks

Shares of a company that provide dividends to their holders before common stock dividends are issued and typically do not come with voting rights.

Cumulative

Cumulative refers to the total amount accumulated over a period of time, adding up all parts or elements.