AP Macroeconomics : How to find net exports

Study concepts, example questions & explanations for AP Macroeconomics

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Example Questions

Example Question #1 : Flow Of Funds

A depreciation in the value of a nation's currency will lead to what?

Possible Answers:

Higher exports

Higher imports

An increase in tax revenue

An increase in wages

Correct answer:

Higher exports

Explanation:

A devaluation of a currency makes a nation's goods cost less to holders of foreign currency. Since the goods are now cheaper, there will be an increase in the quantity of goods demanded by holders of foreign currency. More foreigners buying goods means those goods must be shipped to them leading to an increase in exports. 

Example Question #2 : How To Find Net Exports

A trade surplus results from a country having __________.

Possible Answers:

net imports that exceed the total GDP

more net exports than net imports

net imports that equal less than one third of total GDP

net exports that equal more than one half of total GDP

more net imports than net exports

Correct answer:

more net exports than net imports

Explanation:

Net imports describe all goods brought into a country through trade, and net exports describe all goods sold to foreign countries. A trade surplus describes any situation in which net exports are greater than net imports. A trade surplus is a target for most nations.

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