A U.S.fast food restaurant chain sells dollars for Argentinean pesos and then uses the pesos to buy Argentinean beef.Which of the following do these transactions increase?
A)Argentinean net capital outflow and Argentinean net exports
B)only Argentinean net exports
C)only Argentinean net capital outflow
D)neither Argentinean net exports nor Argentinean capital outflow

Question

Quizplus · Accepted Answer

Selling dollars for pesos and then using the pesos to buy Argentinean beef increases both Argentinean net capital outflow and Argentinean net exports. Net capital outflow increases because the U.S. restaurant chain is investing in Argentina by purchasing pesos, which are then used to buy Argentinean goods. Net exports increase because the Argentinean beef is being sold to a foreign customer, the U.S. fast food chain.

A USfast Food Restaurant Chain Sells Dollars for Argentinean Pesos and and Then