A firm in India sells spices to a Canadian chain of culinary stores. Which statement best identifies the effects of this transaction?
A) It increases Canadian and Indian net exports.
B) It decreases Canadian and Indian net exports.
C) It increases Canadian net exports and decreases Indian net exports.
D) It decreases Canadian net exports and increases Indian net exports.

Question

Quizplus · Accepted Answer

This transaction would increase Indian net exports because India is exporting goods to Canada. Conversely, it would decrease Canadian net exports because Canada is importing goods from India. Net exports are calculated as the value of a country's exports minus the value of its imports.

A Firm in India Sells Spices to a Canadian Chain