A U.S.firm sells diesel locomotives to a German railroad.Other things the same,this sale
A)increases U.S.net exports and decreases German net exports.
B)decreases U.S.net exports and increases German net exports.
C)increases U.S.and German net exports.
D)decreases U.S.and German net exports.

Question

Quizplus · Accepted Answer

The sale of diesel locomotives by the U.S. firm to the German railroad represents an increase in U.S. exports, as the goods are leaving the U.S. and entering Germany. At the same time, it represents a decrease in German net exports, as the goods are entering Germany and leaving the U.S. Overall, this transaction does not increase net exports for both countries, but rather creates a trade surplus for the U.S. and a trade deficit for Germany.

A USFirm Sells Diesel Locomotives to a German Railroad