Define net export and net capital outflow.

Question

Studies indicate that net exports and net capital outflows tend to be equal. 1. Explain why net exports and net capital outflows always tend to be equal. 2. Explain how a change in interest rates can lead to changes in net exports?

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Question

Chapter 18, Problem 1QR

To determine

Define net export and net capital outflow.

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Studies indicate that net exports and net capital outflows tend to be equal. 1. Explain why net exports and net capital outflows always tend to be equal. 2. Explain how a change in interest rates can lead to changes in net exports?

would each of the following transactions be included in net exports or net capital outflow? Please also tell whether it would represent an increase or a decrease in that variable. i. A Pakistani buys a Sony TV. ii. A Pakistani buys a share of Sony stock. iii. The Sony pension fund buys a bond from Pakistani Treasury. iv. A worker at a Sony plant in Japan buys some mango from a Pakistani farmer.

a) Would each of the following transactions be included in net exports or net capital outflow? Be sure to say whether it would represent an increase or decrease in that variable. i) An Indian buys a Samsung TV ii) An Indian buys a share of sony stock iii) The sony pension fund buys a bond from the Indian government iv) A worker at a Toyota plant in Japan buys some Nagpur oranges from an Indian farmer