Mike,a U.S.citizen,buys $1,000 worth of olives from Greece.By itself this purchase
A)increases U.S.imports by $1,000 and increases U.S.net exports by $1,000.
B)increases U.S.imports by $1,000 and decreases U.S.net exports by $1,000.
C)increases U.S.exports by $1,000 and increases U.S.net exports by $1,000.
D)increases U.S.exports by $1,000 and decreases U.S.net exports by $1,000.

Question

Quizplus · Accepted Answer

When Mike buys $1,000 worth of olives from Greece, it increases U.S. imports by $1,000 (since the olives are coming into the country) and decreases U.S. net exports by $1,000 (because net exports = exports - imports, and in this case exports are unaffected, but imports have increased by $1,000, resulting in a decrease in net exports by the same amount).

Mike,a USCitizen,buys $1,000 Worth of Olives from Greece