Suppose Japan increases its imports from Sweden,leading to a rise in Sweden's exports and income level.With a higher income level,Sweden imports more goods from Japan.Thus a change in imports in Japan results in a feedback effect on its exports.This process is best referred to as the:
A) Monetary approach to balance-of-payments adjustment
B) Discretionary income adjustment process
C) Foreign repercussion effect
D) Price-specie flow mechanism

Question

Quizplus · Accepted Answer

This process is best referred to as the foreign repercussion effect, which describes the feedback effect on exports when a country increases its imports from another country. As Sweden's income level rises, it imports more goods from Japan, leading to a further increase in Japan's exports. This creates a loop in which the initial change in imports has a multiplying effect on exports through the foreign repercussion effect. The other options, such as the monetary approach, discretionary income adjustment process, and price-specie flow mechanism, do not fully capture this feedback effect on exports resulting from changes in imports.

Suppose Japan Increases Its Imports from Sweden,leading to a Rise