Suppose the United States has no exports. The only imports of the US are 400 Mercedes Benz cars worth US$50,000 each from Germany. Germany has no imports and only exports those 400 cars to the US. Neither the US nor Germany trade with any other countries or engage in any transactions with other countries. Which one of the following statements must be true? (3) a) The US has a capital account deficit b) Germany has a current account deficit c) Germans are buying US assets d) The exchange rate of USD per Euro must be > 1 e) None of the above Explain your choice in detail: What would be the value of US-Germany trade?

/in /by

Suppose the United States has no exports. The only imports of the US are 400 Mercedes Benz cars worth US$50,000 each from Germany. Germany has no imports and only exports those 400 cars to the US. Neither the US nor Germany trade with any other countries or engage in any transactions with other countries. Which one of the following statements must be true? (3)

  1. a) The US has a capital account deficit
  2. b) Germany has a current account deficit
  3. c) Germans are buying US assets
  4. d) The exchange rate of USD per Euro must be > 1
  5. e) None of the above

Explain your choice in detail:

What would be the value of US-Germany trade?

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