Final answer:
A German company's sale of vehicles to a Canadian dealership decreases Canadian net exports and increases German net exports as imports are subtracted from a country's exports to calculate net exports.
Step-by-step explanation:
When a German company sells vehicles to a dealership in Canada, it affects the trade balances of both countries involved. The correct statement that identifies the effects of these transactions is: they decrease Canadian net exports and increase German net exports.
Here's why: Net exports, which are part of a country's balance of trade, are calculated by subtracting the value of a country's imports from the value of its exports. When Canada imports vehicles from Germany, these vehicles are added to Canada's imports, which decreases Canada's net exports. At the same time, these vehicles count as exports for Germany, thus increasing German net exports.
To maintain a healthy economy with no increase in total unemployment, both countries need to achieve a balance in trade where the value of exports is comparable to that of imports, or where job creation in other sectors offsets the losses.