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

Exports: sale of domestically produced goods and services to foreign citizens.

Imports: purchase of goods and services produced in foreign countries by domestic citizens.

Net export = export - import

A) students in Prague Flock to see the latest movie from Hollywood - exports increases. Import remains unchanged. Net export increases.

B) Mrs Jones in Philadelphia buys a new Volvo - export remains unchanged, import increases, net export decreases.

C) the student bookstore at Oxford University in England sells a copy of a U.S printed /authored textbook - the book is produced in US, and bought in England by a student, so export increases, import is unchanged, net export increases.

D) A Canadian citizen shops at a store in northern Vermont to avoid Canadian sales tax - the citizen buys a product produced in the USA, so export increases, import is unchanged, net export increases.

E) An American art professor spends the summer touring museums in Europe- As the professor buys goods/services produced in Europe, so import will increase, export is unchanged, net export decreases.