Identify the correct statement about net exports.
A)The value of net exports increases as real domestic income increases.
B)The value of net exports increases as real domestic income decreases.
C)The value of net exports is dependent on the amount of government purchases.
D)The value of net exports is always positive.
E)The value of net exports is always negative.

Question

Quizplus · Accepted Answer

Net exports refer to the value of a country's total exports minus its total imports. As real domestic income decreases, people tend to spend less on imports which in turn reduces the value of total imports. This leads to an increase in the value of net exports. Therefore, the correct statement is that the value of net exports increases as real domestic income decreases (option B). Options A, C, D, and E are incorrect.

Identify the Correct Statement About Net Exports