How do each of the following transactions affect:

(1) the trade surplus or deficit for the United States AND

(2) capital inflows or outflows for the United States

a.A Chinese exporter sells television setsto U.S. consumers, and usesthe U.S. dollars earned to buy governmentdebt.

The purchase of imported TVscreates a trade(Click to select)surplusdeficitand the Chinesepurchase of U.S. bonds creates a capital(Click to select)outflowinflow.

NX (trade balance)(Click to select)><=0.

KI(net capital inflows)(Click to select)=<>0.

NX+KI(Click to select)=><0.

b.An American oil producers uses proceeds from its sale of oil to Canadato buy oil drilling equipment from a Canadian firm.

The sale of oil to Canada and thepurchase of drilling equipment by the U.S. firm(Click to select)does createdoes not createa trade(Click to select)surplusdeficitdeficit or surplusand(Click to select)does createdoes not createa capital(Click to select)outflowinflowinflow or outflow.

NX(trade balance)(Click to select)<>=0.

KI(net capital inflows)(Click to select)=<>0.

NX+KI(Click to select)>=<0.

c.A.U.S. firm in the agricultureindustry sellscorn to Braziland uses the proceeds from its sale to purchase newly issued bondsfrom the Brazilian government.

The U.S. export createsatrade(Click to select)deficitsurplusand the purchase of Brazilian government bonds creates a capital(Click to select)inflowoutflow.

NX(trade balance)(Click to select)<>=0.

KI(net capital inflows)(Click to select)>=<0.

NX+KI(Click to select)>=<0.