U.S.-based John Deere sells machinery to residents of South Africa who pay with South African currency (the rand).
A)This increases U.S.net capital outflow because the U.S.acquires foreign assets.
B)This decreases U.S.net capital outflow because the U.S.acquires foreign assets.
C)This increases U.S.net capital outflow because the U.S.sells capital goods.
D)This decreases U.S.net capital outflow because the U.S.sells capital goods.

Question

Quizplus · Accepted Answer

When John Deere sells machinery to South Africa and receives payment in rand, the U.S. acquires foreign currency, which can be considered a foreign asset, thus increasing U.S. net capital outflow.

US-Based John Deere Sells Machinery to Residents of South Africa