If a USShirt Maker Purchases Cotton from Egypt,U

question 109

Multiple Choice

If a U.S.shirt maker purchases cotton from Egypt,U.S.net exports

• A)increase,and U.S.net capital outflow increases.
• B)increase,and U.S.net capital outflow decreases.
• C)decrease,and U.S.net capital outflow increases.
• D)decrease,and U.S.net capital outflow decreases.

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Definitions:

Two-transaction Theory

A concept in accounting that proposes a business transaction affects two or more accounts in the ledger, which is fundamental to the double-entry bookkeeping system.

Exchange Gains

Profits earned from the favorable movement of currency exchange rates that impact the value of foreign currency transactions.

Net Income

is the total profit or loss of a company after all revenues, expenses, taxes, and dividends are accounted for, over a specific period.

Forward Exchange Contract

A financial agreement to exchange a specific amount of one currency for another at a predetermined future date and rate, used to hedge against currency risk.