Which of the following will cause the net export function to shift?
A)A change in real GDP
B)An increase in government spending
C)An increase in investment spending
D)A change in the exchange rate
E)A change in the domestic interest rate

Question

Quizplus · Accepted Answer

A change in the exchange rate will cause the net export function to shift as it directly affects the price of goods and services in international markets. When the domestic currency appreciates, exports become more expensive while imports become cheaper, reducing net exports. Conversely, a depreciation of the domestic currency will make exports cheaper and imports more expensive, leading to an increase in net exports. The other options do not directly affect net exports and are less relevant to this function.

Which of the Following Will Cause the Net Export Function