When income in the rest of the world increases, their demand for domestic goods also increases, leading to higher exports. A currency depreciation makes exports relatively cheaper, thereby increasing demand in foreign markets. Therefore, exports are positively related to income in the rest of the world and currency depreciation.

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Exports Are

Question 18

Multiple Choice

Exports are:

A) positively related to income in the rest of the world and currency appreciation.
B) positively related to income in the rest of the world and currency depreciation.
C) positively related to domestic income and currency appreciation.
D) positively related to domestic income and currency depreciation.

Correct Answer: