Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It decreases purchasing power, leading to reduced exports.
B
It increases purchasing power, allowing consumers to buy more exports.
C
It has no effect on purchasing power or exports.
D
It only affects domestic consumption, not exports.
Understanding the Answer
Let's break down why this is correct
Answer
When real wages increase, it means that people have more money to spend because their income has risen while prices for goods and services have not gone up as much. This increase in income allows consumers to buy more products, including those from other countries, known as exports. For example, if a person receives a raise and can now afford to buy a new smartphone from another country, this boosts demand for that exported product. As more people can afford to buy these goods, it can lead to an increase in exports for the country producing them. Overall, higher real wages can strengthen the purchasing power of consumers, encouraging them to buy more imported goods.
Detailed Explanation
When real wages go up, people have more money to spend. Other options are incorrect because Some might think that higher wages mean less money for exports; It's a common mistake to think wages don't change anything.
Key Concepts
purchasing power
Topic
Real Wages and Exports Impact
Difficulty
easy level question
Cognitive Level
understand
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