If I purchase a stereo from South Korea, I obtain the stereo and South Korea obtains the dollars But if I purchase a stereo produced in the Pakistan I obtain the stereo and the rupees remain in Pakistan, This line of reasoning is ?
Correct answer: C. deceiving since Koreans eventually spend the dollars on Pakistani goods
- A. valid for stereos, but nor for most products imported by Pakistan
- B. valid for most products imported by Pakistan but not for stereos
- C. deceiving since Koreans eventually spend the dollars on Pakistani goods
- D. deceiving since the dollars spent on a stereo built in the Pakistan eventually wind up overseas
Explanation
The argument misleadingly treats the initial movement of currency as a permanent loss: South Korea can use the dollars to purchase Pakistani goods or assets. International trade involves reciprocal transactions rather than money simply disappearing abroad.
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