Question

Suppose country A sells $100 million worth of goods and services to country B. Country B sells $50 million worth of goods and services to country A. These are the only two countries in macro world. Net exports in country:
a) B equal −$50 million.
b) A equal $150 million.
c) A equal -$150 million.
d) B equal $50 million.

Answer 1

Answer:

The correct answer is option a.

Explanation:

Country A sells $100 million worth of goods and services to country B. This is exports for country A.

Country B sells $50 million worth of goods to country A. This is imports of country A.

Net exports are the difference between exports and imports.

Net exports for country A

= Exports - Imports

= $100 million - $50 million

= $50 million

Country A sells $100 million worth of goods and services to country B. This is imports for country B.

Country B sells $50 million worth of goods to country A. This is exports for country B.

Net exports for country B

= Exports - Imports

= $50 million - $100 million

= - $50 million