Answer:
1. Determine the effects of this transaction on
a. Exports - There will be no effect on the export of the USA;
b. Imports - The initial amount spent on the importation of the toys and the videogame plus $10,000.00 spent on the importation of PlayNation Perfect Video game console to increase the inventory will put the Japanese economy on a favourable BalanceBalance of Payment (BOP) because money came into the economy and left the USA economy simultaneously.
c. Net exports in the U.S. economy will be low.
Explanation:
a. Exports - There will be no effect on the export of the USA because the store did not export anything rather it imported the PlayNation Perfect video game console from a Japanese company and spent an additional $10,000.00 to increase his inventory. Simply put, money left the US economy without a complementary import to strike a balance in Balance of Payment.
b. Imports - The initial money spent in the importation of the consignment and $10,000.00 spent to increase his inventory will put the Japanese economy on a favourable Balance of Payment (BOP) because money came into the economy and left the US economy;
c. Net exports in the U.S. economy will be low because there were importations of goods into the economy without corresponding export to have a favourable Balance of Payment in the International Trade. It is when the Exports in USA is greater that that of the import that you have a favourable Balance of Paymet and it translates to improve GDP.
