Suppose the exchange falls.As a result,
A) net exports decrease.
B) net exports increase.
C) exports decrease and imports decrease.
D) exports increase and imports increase.
E) exports do not change because they are autonomous and imports decrease.

Question

Quizplus · Accepted Answer

When the exchange rate falls, domestic goods become cheaper for foreign buyers, leading to an increase in exports. Simultaneously, foreign goods become more expensive for domestic consumers, leading to a decrease in imports. This results in an overall increase in net exports.

Suppose the Exchange Falls.As a Result