An U.S. firm buys a new industrial sewing machine from a company located in France. Which of the following is true?
I. U.S. net exports decrease.
II. U.S. investment increases.

Question

Quizplus · Accepted Answer

When the U.S. firm buys the sewing machine, it is considered an import, which decreases U.S. net exports. Additionally, the purchase of the sewing machine is considered an investment in capital goods, thus increasing U.S. investment.

An US Firm Buys a New Industrial Sewing Machine from a a Company