A Department Store Chain in Japan Uses Yen to Purchase

question 178

Essay

A department store chain in Japan uses yen to purchase 500,000 U.S. dollars from a U.S. bank. It then uses these dollars to buy DVDs from a U.S. filmmaker. As a result of these transactions:
A. By how much and in what direction did U.S. net exports change?
B. By how much and in which direction did U.S. net capital outflow change?

---

Definitions:

Fed

Short for the Federal Reserve System, it's the central banking system of the United States, responsible for monetary policy.

Government Bonds

Government bonds are debt securities issued by a government to support government spending and obligations, often considered low-risk investments.

Value of Money

The purchasing power of money, which can vary based on inflation or deflation, affecting how much goods and services can be bought.

Inflation Rate

Over time, the increment in the price level percentage for goods and services in an economy.