A Swedish citizen buys an automobile produced in the United States by a German company.As a result,________.
A) U.S. net exports increase, U.S. GDP is unaffected, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected
B) U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, German GNP is unaffected, and German GDP decreases
C) U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected
D) U.S. net exports and GDP are unaffected; Japanese GNP increases; and German net exports, GNP, and GDP decrease

Question

Quizplus · Accepted Answer

When a Swedish citizen buys an automobile produced in the United States by a German company, it is considered as an export from the U.S. and increases U.S. net exports and GDP. However, since the German company producing the automobile is not located in the United States, U.S. GDP is unaffected. The purchase does not affect Japanese GNP directly, but it may indirectly increase due to the interdependence of the global economy. Since the automobile is produced by a German company, it will decrease German net exports. However, since the production is carried out by a German company, German GNP and GDP are unaffected. Therefore, the best choice is C.

A Swedish Citizen Buys an Automobile Produced in the United