In the open-economy macroeconomic model, net exports represent the quantity of dollars demanded in the foreign-currency exchange market.

Question

Quizplus · Accepted Answer

Net exports represent the quantity of goods and services exported minus the quantity of goods and services imported. It is not directly related to the demand for dollars in the foreign-currency exchange market. However, changes in net exports can indirectly affect the demand for dollars as they affect the supply and demand for foreign currencies, which in turn affects the exchange rate between the domestic and foreign currency.

In the Open-Economy Macroeconomic Model, Net Exports Represent the Quantity