Question

< Back to Assignment Attempts: Average: 12 4. Net capital outflow and net exports An open economy interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, the following identity must remain true: Net Capital Outflow Net Exports In other words, ir a transaction directly affects the left side of this equation, then it must also affect the right side. The following problem will help you understand why this identity must hold. Suppose you own a toy store in the United States, where there is high demand for the PlayNation Perfect, a video game console. Because of this, you spend $10,000 to increase your inventory of the gaming system, which is manufactured by Zony a Japanese company. In Japan Determine the effects of this transaction on exports, Imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction or change is "No change, enter in the Magnitude of Change column Hint: The magnitude of change should always be positive, regardless of the direction of change. Direction of Change Magnitude of Change (Dollars) Lxports 10,000

Answer 1

The US bays from Tag, a Japanese company :: Import of the us in onores. in exports; . net esport decreases As there is no change now – $10,000 Magnitude of change US in So, the net of export of the fill Thus, we the table as! Direction of change Exparts No change 9 Icreases) Imports 110,000 110,000 Decreases Net esports Choine sigh since we need to enter the magnitude) decrease )in.... The decrease in us net exports is matched by The scenarios! All there (check all the 3 options)

Kindly upvote:)