A curve showing the relationship between net exports and the real exchange rate is ________.

Name: A curve showing the relationship between net exports and the real exchange rate is ________.
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Question

Quizplus · Accepted Answer

According to the theory of purchasing power parity, as the real exchange rate of a country appreciates, its exports become relatively more expensive and its imports become relatively cheaper. This leads to a decrease in net exports, resulting in a downward-sloping curve. Therefore, option D is the correct answer.

A Curve Showing the Relationship Between Net Exports and the Real