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How does a depreciation in the real exchange rate affect net exports?
  • a)
    Net exports increase.
  • b)
    Net exports decrease.
  • c)
    Net exports remain unchanged.
  • d)
    Net exports become unpredictable.
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
How does a depreciation in the real exchange rate affect net exports?a...
A depreciation in the real exchange rate encourages exports and discourages imports, leading to an increase in net exports. This increase in net exports is driven by the improved competitiveness of the open economy's goods in international markets.
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How does a depreciation in the real exchange rate affect net exports?a)Net exports increase.b)Net exports decrease.c)Net exports remain unchanged.d)Net exports become unpredictable.Correct answer is option 'A'. Can you explain this answer?
Question Description
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