If a UK consumer buys a camera from a manufacturer in the United States,everything else remaining unchanged,________.

Question

Quizplus · Accepted Answer

When a UK consumer buys a camera from a US manufacturer, it involves importing goods from the US which increases the UK's import expenditure and simultaneously increases the net exports of the US. Therefore, option A is correct. Option B is incorrect because there won't necessarily be a surplus in the financial account of the US just because a UK consumer buys a camera. Option C is also incorrect because net factor payments involve income earned from foreign investments or foreign income earned by domestic residents. Buying a camera doesn't affect this. Lastly, option D is incorrect because a UK consumer buying a camera won't necessarily cause a deficit in the financial account of the UK.

If a UK Consumer Buys a Camera from a Manufacturer