If the real exchange rate of a country decreases,then net exports will:
A) be positive.
B) be negative.
C) increase.
D) decrease.

Question

Quizplus · Accepted Answer

A decrease in the real exchange rate means that the country's currency has depreciated relative to other currencies. This makes the country's exports cheaper and more attractive to foreign buyers, leading to an increase in demand for the country's goods and services. Therefore, net exports would increase.

If the Real Exchange Rate of a Country Decreases,then Net