A U.S.grocery chain buys bananas from Honduras and pays for them with U.S.dollars.
A)The purchase of the bananas increases U.S.net exports and the payment with dollars increases U.S.net capital outflow.
B)The purchase of bananas increases U.S.net exports and the payment with dollars decreases U.S.net capital outflow.
C)The purchase of bananas decreases U.S.net exports and the payment with dollars increases U.S.net capital outflow.
D)The purchase of bananas decreases U.S.net exports and the payment with dollars decreases U.S.net capital outflow.

Question

Quizplus · Accepted Answer

The purchase of bananas from Honduras is an import for the U.S., which decreases U.S. net exports. Paying with U.S. dollars does not affect net capital outflow, as it is a straightforward transaction without capital movement.

A USGrocery Chain Buys Bananas from Honduras and Pays for Them