If the domestic income of a nation's citizens increases, net exports will likely:
A) increase.
B) decrease.
C) remain constant.
D) There is not enough information to determine what will happen.

Question

Quizplus · Accepted Answer

When a nation's domestic income increases, it can lead to an increase in imports as the citizens have more disposable income to spend on foreign goods. This can in turn lead to a decrease in net exports, as net exports are calculated by subtracting imports from exports. Therefore, if domestic income increases, net exports will likely decrease.

If the Domestic Income of a Nation's Citizens Increases, Net