A U.S. mutual fund uses $1 million to buy South Korean won from a Korean bank. It then uses these won to buy stocks of a Korean electronics firm. The Korean electronics firm then exchanges the $1 million dollars' worth of South Korean won for U.S. dollars from a U.S. bank. It uses these dollars to buy equipment manufactured by a company located in the U.S. (a) Explain how U.S. net capital outflow changes as a result of these transactions and exchanges. (b) Explain how U.S. net exports change as a result of these transactions and exchanges.

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