The ________ effect illustrates the fact that imports affect exports and exports affect imports.

Question

Quizplus · Accepted Answer

The trade feedback effect refers to the reciprocal impact of imports on exports and exports on imports. Specifically, if a country's imports increase, this will reduce its domestic production and hence exports, leading to a reduction in net exports. Similarly, if a country's exports increase, this will boost its domestic production and hence imports, leading to an increase in net exports. Therefore, the correct answer is D.

The ________ Effect Illustrates the Fact That Imports Affect Exports