Question

g A U.S. firm buys sardines from Morocco and pays for them with U.S. dollars. Other things the same, U.S. net exports a. increase, and U.S. net capital outflow increases. b. increase, and U.S. net capital outflow decreases. c. decrease, and U.S. net capital outflow increases. d. decrease, and U.S. net capital outflow decreases.

Answer 1

d. decrease, and U.S. net capital outflow decreases.

Step-by-step explanation:

net exports = total exports - total imports

in this case, imports increase, so net exports will decrease

The net capital outflow represents the money being invested in a country. If foreign investors invest in the US economy then the net capital outflow will increase. But if US investors invest in foreign economies, the net capital outflow will decrease. In this case, the US company paid the foreign company in US dollars, therefore, the foreign company now has a US asset (US dollars).