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: -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-3: -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-4: -A higher price level therefore reduces net exports. A lower price level encourages exports and reduces imports, increasing net exports.

Detailed explanation-5: -If real GDP rises and the GDP price index has increased: nominal GDP must have increased. If depreciation exceeds gross investment: the economy’s stock of capital is shrinking.