The following figure shows the net exports curve for a country:

-Refer to the figure above.When the real exchange rate is below R*,there is a trade surplus.

Question

The following figure shows the net exports curve for a country:
 
-Refer to the figure above.When the real exchange rate is below R*,there is a trade surplus.

Quizplus · Accepted Answer

The net exports curve in the figure slopes upward, indicating that as the real exchange rate decreases (or becomes depreciated), the trade balance improves (becomes surplus). Therefore, when the real exchange rate is below R*, there is a trade surplus.

The Following Figure Shows the Net Exports Curve for a Country