If a U. S. corporation sells a product in Europe and uses the proceeds to purchase shares in a European corporation, then U. S. net exports , and net capital outflows .

Reduces

Increases

Explanation:

If a U.S. corporation sells a product in Europe and uses the proceeds to purchase shares in a European corporation, then U.S. net exports reduces, and net capital outflows increases.

Net exports are the difference between a country's total value of exports and total value of imports.

Capital outflow is the movement of assets out of a country. The outflow of assets occurs when foreign and domestic investors sell off their holdings in a particular country because of perceived weakness in the nation's economy and the belief that better opportunities exist abroad.

In the scenario the U.S. corporation has converted exports (which could have increased the value of Net exports) to investment abroad which is capital outflow

... then U.S. net exports INCREASE, and net capital outflows INCREASE.

Explanation:

In order for the capital outflow to be positive, the trade balance must be positive. This means that higher net exports will increase the capital outflow.

You can measure net capital outflow in two different ways:

When a US company is selling its products to European clients, it is exporting, and as exports increase, the capital outflow also increases.

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