MACRO-Factors affecting Net Exports

Question 1

What are the Factors which affect net-exports?

Answer 1

-RDI at home
-RDI abroad
-Domestic Inflation
-Exchange rates
-Trade barriers
-Non-price Factors

Question 2

How can RDI at home affect Net Exports and why might you explanation not hold?

Answer 2

-IF RDI Increases
-Consumption Increases
-Imports Increase
-Net exports Increase
/
-Depends on the extent of the Increase in Income
-Depends on the Level of Manufacturing the country has

Question 3

How can RDI abroad affect Net Exports and why might you explanation not hold?

Answer 3

-IF RDI increases
-Exports Increase
-Net exports increase
- The UK trades mainly with the EU
/
- The UK isn’t Known to produce mass market products e.g. Cars
-We assume that the UK trades with the USA

Question 4

How can Domestic Inflation affect Net Exports and why might you explanation not hold?

Answer 4

IF there is High inflation
-Exports Decrease
-Imports increase
-High inflation means that the UK goods are less competitive
/
Depends on the Extent of the Inflation

Question 5

How can Exchange rates affect Net Exports and why might you explanation not hold?

Answer 5

Weak Currency: Exports Cheaper Imports Dearer
Weak currency - Exports have a Cheaper Demand
Strong Currency- Imports have a expensive demand
/
Exchange rates don’t fluctuate everyday

Question 6

How can Trade barriers affect Net Exports and why might you explanation not hold?

Answer 6

Greater barriers = limited trade
/
The size of tariffs may have an affect

Question 7

How can non-price factors affect Net Exports and why might you explanation not hold?

Answer 7

Good quality - More exports
Bad quality - Less exports
/
Price also determines Demand