In a Small Open Economy, If Exports Equal $15 Billion

question 89

Multiple Choice

In a small open economy, if exports equal $15 billion and imports equal $8 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:

Retained Earnings

Represents the portion of a company's profits not distributed as dividends to shareholders but instead reinvested in the business.

Free Cash Flow

This is a financial performance measure that shows how much cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Management Bonuses

Additional compensation awarded to executives and managers, often tied to performance metrics such as company profitability or achievement of specific goals.

Bond Holders

Individuals or institutions that own bonds, which are debt securities issued by corporations or governments.