Question

Mike, a U.S. citizen, buys $1,000 worth of olives from Greece. By itself this purchase

a. increases U.S. exports by $1,000 and increases U.S. net exports by $1,000.
b. increases U.S. exports by $1,000 and decreases U.S. net exports by $1,000.
c. increases U.S. imports by $1,000 and increases U.S. net exports by $1,000.
d. increases U.S. imports by $1,000 and decreases U.S. net exports by $1,000.

Answer 1

d. increases U.S. imports by $1,000 and decreases U.S. net exports by $1,000.

Step-by-step explanation:

There are two types of international trades, import and export

Import refers to the trade where the principal country buys goods from another country and takes goods.

Export refers to the trade in which the principal country sells goods from own country and send to the buyer country.

Here principal country is the country of concerned person Mike that is US

Since he purchased he bought goods i.e. Olives from Greece into US.

That means he made a import.

With this US import rises by $1000,

Further net exports = Total export - Total import

Since with this transaction total imports increased by $1,000 net exports will decrease by $1,000

d. increases U.S. imports by $1,000 and decreases U.S. net exports by $1,000.