ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When the exports from the country increases, there will be decrease in the level of domestic aggregate supply in the economy. Given the demand for good in the domestic market, the decrease in supply of goods will lead to increase in the price level. The real GDP is the difference between nominal GDP and inflation rate.

Detailed explanation-2: -Exports measures the portion of total U.S. production of goods and services-gross domestic product (GDP)-that is provided to the rest of the world; thus, movements in exports reflect changes in foreign demand for U.S.-produced goods and services.

Detailed explanation-3: -GDP is important because it gives information about the size of the economy and how an economy is performing. The growth rate of real GDP is often used as an indicator of the general health of the economy. In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well.

Detailed explanation-4: -An increase in exports increases GDP because they bring in more revenue from foreign nations through the goods that are exported. Imports, on the other hand, do not affect GDP since they are not produced domestically.

Detailed explanation-5: -A higher price level therefore reduces net exports. A lower price level encourages exports and reduces imports, increasing net exports.