Suppose That Bill, a Resident of the U

question 160

Essay

Suppose that Bill, a resident of the U.S., buys software from a company in Japan. Explain why and in what directions this changes U.S. net exports and U.S. net capital outflow.

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Definitions:

Variable Costing

An accounting method that only considers variable costs in the calculation of product or service costs, excluding fixed costs.

Net Operating Income

The profit a company makes from its regular business operations, excluding non-operating income and expenses.

Units

A standard quantity of a product, used in various contexts such as measurement, accounting, or inventory control.

Variable Costing

A management accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold.