Answer to Question #207149 in Macroeconomics for Milly

Question

What factors determine exports

Answer 1

I) The country's exchange rate

When a country's exchange rate falls, export prices fall and import prices rise. This is anticipated to boost the value of its exports while reducing the amount spent on imports.

ii) Productivity

The more productive a country's workforce is, the lower its labor costs per unit and the lower the cost of its goods. A boost in productivity is likely to lead to a bigger number of families and businesses purchasing more of the country's goods, resulting in an increase in exports and a decrease in imports.