A U.S. pharmacy buys drugs from a British company and pays for them with US dollars. This transaction

Question

Quizplus · Accepted Answer

When the U.S. pharmacy buys drugs from a British company and pays for them with U.S. dollars, it increases British net exports (since the drugs are being sold to another country), but it does not decrease U.S. net capital outflow (since the payment is being made in U.S. dollars, which does not involve a transfer of assets). Therefore, the best choice is B: "increases British net exports, and decreases U.S. net capital outflow."

A US Pharmacy Buys Drugs from a British Company and Pays