Practice mode Budget Deficits And The Trade Balance

The EU imposes a quota on clothing imports from China, reducing UK clothing imports. What happens to UK net exports?

Correct answer A. Net exports will remain unchanged

Explanation

The quota appreciates the pound, which lowers other exports and raises other imports; because net exports equal saving minus investment, the overall total stays the same.

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The EU imposes a quota on clothing imports from China, reducing UK clothing imports. What happens to UK net exports?

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The EU imposes a quota on clothing imports from China, reducing UK clothing imports. What happens to UK net exports?

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