Question

g Suppose that more British decide to vacation in the U.S. and that the British purchase more U.S. Treasury bonds. Ignoring how payments are made for these purchases, a. the first action by itself raises U.S. net exports, the second action by itself raises U.S. net capital outflow. b. the first action by itself raises U.S. net exports, the second action by itself lowers U.S. net capital outflow. c. the first action by itself lowers U.S. net exports, the second action by itself raises U.S. net capital outflow. d. the first action by itself lowers U.S. net exports, the second action by itself lowers U.S. net capital outflow.

Answer 1

Answer:

b. the first action by itself raises U.S. net exports, the second action by itself lowers U.S. net capital outflow.

Explanation:

Net exports are equal to the difference between the value of a nation's total export of goods, services and the value of all the goods and services it imports.

U.S. net export raises as more British decide to vacation in the U.S. and U.S. net capital outflow reduces as the British purchase more U.S. Treasury bonds.

So, option b is correct.