The net export effect is caused by:
A) the negative relationship between the price level and the exports minus imports.
B) the positive relationship between the price level and the exports minus imports.
C) the negative relationship between the price level and the exports.
D) the negative relationship between the price level and the exports plus imports.

Question

Quizplus · Accepted Answer

The net export effect refers to the change in a country's net exports (exports minus imports) caused by a change in the price level. Generally, as the price level in a country rises, its exports become more expensive relative to other countries, leading to a decrease in exports and an increase in imports. This results in a decrease in net exports, which is a negative effect on the economy. Therefore, the correct choice is A, the negative relationship between the price level and the exports minus imports.

The Net Export Effect Is Caused By