If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S. net capital outflow both fall.

Question

Quizplus · Accepted Answer

When Walmart buys goods from China, it increases U.S. imports. When China uses the proceeds to buy U.S. bonds, it increases U.S. capital inflows. Both of these transactions reduce U.S. net exports and U.S. net capital outflow.

If Walmart Buys $50 Million Worth of Consumer Goods from China