Suppose you are the Purchasing Manager for a large chain of restaurants in the United States, and you need to make your semiannual purchase of tea. You pay $1,500,000 for a shipment of tea from an Indian tea producer.

(1) What is the impact of this purchase on US imports and capital flows?

(2) What is the impact of this transaction on US net exports?

How would these same flows be impacted by these transactions?

a. The Indian tea producer purchases $1,500,000 worth of stock spread out over a few U.S. companies.

b. The United States sells $1,500,000 worth of bonds to the Indian tea producer.

c. The Indian tea producer hangs on to the $1,500,000 so that it can use the U.S. dollars to make investments.