A Fall in the Relative Prices of a Country's Exports

question 30

Multiple Choice

A fall in the relative prices of a country's exports tends to ________________ that country's net exports, and thereby, to ____ its real GDP.

• A)increase; raise
• B)decrease; raise
• C)decrease; decrease
• D)None of the above is correct.

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Definitions:

Market Demand

The overall sum of a particular good or service that every customer in a market is eager and able to acquire at a range of prices.

Equilibrium Price

The market price at which the quantity demanded equals the quantity supplied, leading to market equilibrium.

Purely Competitive Market

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price-taking behavior.

Total Revenue

The total amount of money a company receives from its goods or services over a certain period of time.