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

Name: If the real exchange rate decreases, then net exports will _____. A) be positive. B) be negative. C) increase. D) decrease.
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Question

Quizplus · Accepted Answer

A decrease in the real exchange rate makes domestic goods relatively cheaper compared to foreign goods. This increased competitiveness of domestic goods may lead to an increase in exports, thereby increasing net exports.

If the Real Exchange Rate Decreases, Then Net Exports Will