Exports tend to increase when the income levels in foreign countries rise, as higher income boosts demand for imported goods. Additionally, exports are negatively related to the exchange rate; a stronger domestic currency makes exports more expensive for foreign buyers, potentially reducing demand.

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Exports Are

Question 25

Multiple Choice

Exports are:

A) positively related to the level of foreign income and negatively related to the exchange rate.
B) positively related to the level of foreign income and positively related to the exchange rate.
C) negatively related to the level of foreign income and negatively related to the exchange rate.
D) negatively related to the level of foreign income and positively related to the exchange rate.

Correct Answer: