Which of the following will cause net exports to rise?
A)A depreciation of the domestic currency
B)A fall in foreign income
C)Higher foreign tariffs on domestic goods
D)Inflation in domestic economy
E)A depreciation of the foreign currency

Question

Quizplus · Accepted Answer

A depreciation of the domestic currency will make domestic goods relatively cheaper to foreign buyers, increasing exports and decreasing imports, leading to an increase in net exports.

Answer: E 
 A depreciation of the foreign currency will make foreign goods relatively more expensive to domestic buyers, decreasing imports and increasing exports, leading to an increase in net exports.

Therefore, choices A and E are the best options that will cause net exports to rise.

Which of the Following Will Cause Net Exports to Rise