If a U.S. corporation purchases a product made in Europe and the European producer uses the proceeds to purchase a U.S. government bond, then U.S. net exports ______ and net capital outflows ______.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question

Quizplus · Accepted Answer

U.S. net exports decrease because the U.S. is importing goods from Europe. Net capital outflows decrease because the purchase of a U.S. government bond by the European producer is an inflow of capital to the U.S.

If a US Corporation Purchases a Product Made in Europe and the and the European