A Peruvian firm purchases construction equipment made in the U.S. and pays for it with Peruvian currency. This transaction

Question

Quizplus · Accepted Answer

When a Peruvian firm purchases construction equipment made in the U.S. and pays for it with Peruvian currency, it increases U.S. net exports. The reason for this is that U.S. goods have been sold to a foreign entity. At the same time, this transaction decreases Peruvian net capital outflow as Peruvian currency is being used to purchase an asset from the U.S. This transaction results in a decrease in the amount of capital flowing out of Peru. Therefore, the correct answer is B.

A Peruvian Firm Purchases Construction Equipment Made in the U