U.S. exports are $300 billion, U.S. imports are $500 billion. Which of the following are consistent with the level of net exports?
a. The U.S has a trade surplus. The U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets.
b. The U.S. has a trade surplus. The U.S. purchases $600 billion worth of foreign assets and foreign countries purchase $800 billion worth of U.S. assets.
c. The U.S has a trade deficit. The U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets.

d. The U.S. has a trade deficit. The U.S. purchases $600 billion worth of

c. The U.S has a trade deficit. The U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets.

Explanation:

Exports = $300 billion

Imports = $500 billion

Trade surplus/(deficit) = $300 billion - $500 billion

= ($200 billion)

Considering all the options,

Purchases = $800 billion

Sales = $600 billion

Trade surplus/(deficit) = $600 billion - $800 billion

= ($200 billion)

Hence the right answer is c. The U.S has a trade deficit. The U.S. purchases $800 billion worth of foreign assets and foreign countries purchase $600 billion worth of U.S. assets.