Which of the following changes would cause Canadian net exports to increase?
A)an increase in the real value of the dollar
B)an increase in Canadian income
C)an increase in foreign income
D)a shift in demand by Canadian consumers away from domestically produced goods

Question

Quizplus · Accepted Answer

An increase in foreign income would increase demand for Canadian exports and therefore increase net exports. A is incorrect because an increase in the value of the Canadian dollar would make Canadian exports more expensive for foreign buyers, decreasing demand and decreasing net exports. B is incorrect because an increase in Canadian income would lead to increased consumption of both domestic and foreign goods, likely increasing imports and canceling out any increase in exports. D is incorrect because a shift in demand by Canadian consumers away from domestically produced goods would have no effect on net exports.

Which of the Following Changes Would Cause Canadian Net Exports