Net exports will tend to be low when the real exchange rate:
A)is high.
B)is low.
C)equals the nominal exchange rate.
D)depreciates.

Name: Net exports will tend to be low when the real exchange rate: A)is high. B)is low. C)equals the nominal exchange rate. D)depreciates.
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Question

Quizplus · Accepted Answer

When the real exchange rate is high, households and business firms desire to buy more goods and services in foreign markets. Thus, imports are high which makes net exports relatively low.

Net Exports Will Tend to Be Low When the Real