Mike,a U.S.citizen,buys $1,000 worth of cheese from France.His action alone
A)increases U.S.imports by $1,000 and increases U.S.net exports by $1,000.
B)increases U.S.imports by $1,000 and decreases U.S.net exports by $1,000.
C)increases U.S.exports by $1,000 and increases U.S.net exports by $1,000.
D)increases U.S.exports by $1,000 and decreases U.S.net exports by $1,000.

Question

Quizplus · Accepted Answer

When Mike buys $1,000 worth of cheese from France, it increases U.S. imports by $1,000 since the cheese is coming from another country. However, it does not increase U.S. exports, so the second part of options A and C are incorrect. Additionally, since imports have increased and exports haven't, U.S. net exports decrease by $1,000, making option B the correct choice. Option D is also incorrect since U.S. exports have not increased.

Mike,a USCitizen,buys $1,000 Worth of Cheese from France