Question

If a U.S. citizen buys a television made in Korea by a Korean firm, then a. U.S. net exports decrease and U.S. GDP decreases. b. U.S. net exports are unaffected and U.S. GDP decreases. c. U.S. net exports are unaffected and U.S. GDP is unaffected. d. U.S. net exports decrease and U.S. GDP is unaffected.

Answer 1

U.S. net exports decrease and U.S. GDP is unaffected.

Step-by-step explanation:

If a United States of America citizen buys a television made in Korea by a Korean firm, then U.S. net exports decrease and U.S. GDP is unaffected.

Export refers to the amount of goods and services produced in a particular country, that is being sold to another country. The Gross Domestic Products (GDP) can be defined as a measure of the total market value of goods and services produced in a country over a specific period of time.

Hence, if a citizen of the United States of America buys a television set made in Korea by a Korean firm, then U.S. net exports decrease because the television set wasn't manufactured in U.S.A and as such it becomes an import.

Also, U.S. GDP is unaffected simply because the television was manufactured in Korea, so it isn't adding any value to the economy of United States of America.