Indicate whether each of the following transactions represents an increase in ne
ID: 2442132 • Letter: I
Question
Indicate whether each of the following transactions represents an increase in net exports, a decrease in net exports, an increase in net capital outflow, or a decrease in net capital outflow for the United States. Net Exports Net Capital Outflow Transaction An American buys a Sony TV. An American investor buys a controlling share in a South Korean electronics firm. The Sony pension fund buys a bond from the U.S. Treasury. A South Korean tourist buys some Sunkist oranges from an American farmer. Increase Decrease Increase DecreaseExplanation / Answer
(Question 1)
Net capital outflow (NCO) = Net exports (= Exports - Imports)
(a) American buys Sony (Japanese) TV - Net exports decrease
[Since purchase of Japanese TV is an import, it lowers net export]
(b) American investor buys share in Korean firm - Net Capital Outflow increase
[Since US capital flows out of the country]
(c) Sony pension fund buys US treasury bond - Net Capital Outflow decrease
[Since foreign capital comes in]
(d) South Korean tourist buys oranges from American farmer - Net exports decrease
(Question 2)
(a) French Historian spends a semester in US - US exports increase, US imports no change, Net exports increase
(b) People in London buy iPhone - US exports increase, US imports no change, Net exports increase
(c) Canadian buys new Ford - US exports increase, US imports no change, Net exports increase
(d) Aunt buys novel by British author - US exports no change, US imports increase, Net exports decrease
(e) Canadian citizen shops at Vermont - US exports increase, US imports no change, Net exports increase
NOTE: As per Chegg Answering Policy, first 2 questions have been answered.