Amber, who lives in Boston, decides to buy a pair of hockey skates from Canada for $100. At the same time, Jean, a Canadian, buys a baseball hat and jersey from Boston for $100. Which of the following statements describes the effect these transactions have on the U.S. balance of trade and payments?

Question

Quizplus · Accepted Answer

Since the value of the imports and exports are equal ($100 each), there is no effect on the balance of trade. Additionally, since both transactions involve individuals buying goods and not making investments, there is no effect on the net capital outflow. Therefore, both net exports and net capital outflow are zero.

Amber, Who Lives in Boston, Decides to Buy a Pair