Answer: Chinese net export decreases and U.S net capital outflow decreases.
Explanation:
Net exports are the value of the total export of a country minus the value of the country's total imports. This means that:
Net exports= Total exports - Total imports
Net capital outflow is the net flow of funds that are invested abroad by a nation during a period of time. A positive net capital outflow implies that the country invests more outside than other countries invest in it.
From the question, we can denote that the Chinese company invests more outside. This will lead to an decrease in net exports since imports are more than exports. Also, the net capital outflow of the United States will decrease because the Chinese are the ones buying scrap metal from the United States.
Therefore, as a result of the transaction, the Chinese net export decreases while the United States net capital outflow also decreases.
