If a U.S. corporation sells a product in Canada and uses the proceeds to purchase a product manufactured in Canada, then U.S. net exports ______ and net capital outflows ______.
A) increase; increase
B) decrease; decrease
C) do not change; do not change
D) do not change; increase

Question

Quizplus · Accepted Answer

Since the corporation sells a product in Canada and then uses the proceeds to purchase a product manufactured in Canada, the transaction is recorded as an export and an import of equal value. Therefore, this transaction does not change net exports or net capital outflows.

If a US Corporation Sells a Product in Canada and Uses the Uses