Domestic income has a ______ relationship with net export spending.
A) negative
B) positive
C) secondary
D) constant

Question

Quizplus · Accepted Answer

According to the theory of the J-curve, there is a negative relationship between domestic income and net export spending. Initially, as income increases, there is an increase in imports due to higher consumer spending, which leads to a decrease in net exports. However, in the long run, as the domestic industries become more competitive and efficient, there is an increase in net exports, resulting in a positive relationship between income and net exports.

Domestic Income Has a ______ Relationship with Net Export Spending