SIE Knowledge of Capital Markets Question 10: Answer and Explanation

Question: 10

Which of the following is correct?

• A. Exchange rates are the proportion of one country's goods and services that are purchased with cash as compared with all goods and services purchased with cash and credit.
• B. The gross domestic product reflects the total of a country's goods and services produced and used or consumed in that country during a period of time.
• C. The gross international product reflects the total of a country's goods and services produced during a period of time.
• D. A trade deficit is enacted by Congress as a tool of fiscal policy.

Correct Answer: B

Explanation:

B: The gross domestic product reflects the total of a country's goods and services produced and used or consumed in that country during a period of time. Choices A, C, and D are not correct. Exchange rates reflect the value of one country's money that may be exchanged for a given amount of another country's money. The gross national product reflects the total of a country's goods and services produced during a period of time. Deficit spending is enacted by Congress as a tool of fiscal policy.