An increase in domestic output would cause a rise in net exports and a rise in the exchange rate.
What are the net exports?
The net exports are the difference between total exports and total imports, also known as the balance of trade.
When domestic output or the GDP increases, it shows that the nation has increased its ability to export. The net exports would be favorable or more than the imports.
Increased net exports show that there is a higher demand for the nation's exports. Therefore, there will be a higher demand for the nation's currency, causing the exchange rate to increase.
Thus, an increase in domestic output would cause a rise in net exports and a rise in the exchange rate.
Learn more about net exports at https://brainly.com/question/26428996
#SPJ4
Question Completion with Answer Options:
a. rise; rise
b. rise; fall
c. fall; rise
d. fall; fall
