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Why are imports deducted in calculating Net Exports?

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Question

Why are imports deducted in calculating Net Exports?

Options

  • They are included in depreciation

  • They are produced outside the domestic economy

  • They represent foreign spending on domestic goods

  • They are government investment

MCQ
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Solution

Imports are deducted because imported goods are produced outside the domestic economy. Subtracting them prevents foreign production from being counted as domestic production.

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