Question

U.S. exports are $300 billion, U.S. imports are $500 billion. Which of the following are consistent with the level of net exports?

a. The U.S has a trade surplus. The U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets.
b. The U.S. has a trade surplus. The U.S. purchases $600 billion worth of foreign assets and foreign countries purchase $800 billion worth of U.S. assets.
c. The U.S has a trade deficit. The U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets.

d. The U.S. has a trade deficit. The U.S. purchases $600 billion worth of

Answer 1

The correct option consistent with the level of net exports is option c. The U.S has a trade deficit. The U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets.

Step-by-step explanation:

The correct option consistent with the level of net exports is option c.

The U.S has a trade deficit. The U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets.

A trade deficit occurs when a country's imports exceed its exports. In this case, U.S. imports are $500 billion, which is larger than U.S. exports of $300 billion.

The given option c states that the U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets, indicating a trade deficit.

Options a and b mention a trade surplus, which contradicts the given information.