Question

Describe how the following transactions would affect U.S. exports, imports, and net exports:

1. Students in Prague flock to see the latest movie from Hollywood.
2. Mrs. Jones in Philadelphia buys a new Volvo.
3. The student bookstore at Oxford University in England sells a copy of a U.S. printed/authored textbook
4. A Canadian citizen shops at a store in northern Vermont to avoid Canadian sales taxes.
5. An American art professor spends the summer touring museums in Europe.

Answer 1

1.Students in Prague flock to see the latest movie from Hollywood - USA earns from box office earnings from Parague, it's a form of export of entertainment and a rise in export earnings imply a positive change in net exports value.

2.Mrs. Jones in Philadelphia buys a new Volvo.- purchasing a foreign made car is a form of import of goods, thus this transaction will contribute to import of goods and lead to a negative change in net exports.

3.The student bookstore at Oxford University in England sells a copy of a U.S. printed/authored textbook- sale of US owned goods is a form of export and an increase in export value would imply a positive change in net exports.

4.A Canadian citizen shops at a store in northern Vermont to avoid Canadian sales taxes.- Purchase of US produced goods by foreign national would contribute to exports and hence lead to a positive change in net exports.

5.An American art professor spends the summer touring museums in Europe.-
This foreign tour would be an earning for European tourism industry and would in turn contribute to import of services and thus lead to a negative change in net exports.