If a U.S.resident buys a $25, 000 car from a Japanese car maker, this transaction will:
A)have a negative effect on Japan's balance of trade in merchandise.
B)have a negative effect on the U.S.balance of trade in merchandise.
C)have a positive effect on the U.S.balance of trade in merchandise.
D)bring money into the United States.
E)have no effect on Japan's balance of trade in merchandise.

Question

Quizplus · Accepted Answer

When a U.S. resident buys a $25,000 car from a Japanese car maker, they are importing a good from Japan. This will increase the U.S. import balance and decrease the U.S. trade balance in goods with Japan. Therefore, option B is correct.

If a USResident Buys a $25, 000 Car from a Japanese Car