Question

If a country removes an import quota, what happens to its exchange rate, its exports, and its net exports?

Answer 1

Import quota restricts the amount of imports in the country .

If country removes import quota then there will be more imports as there is no restrictions due to which our domerstic currency will depreciate and having an adverse effect on the economy .

Since doemstic currency depriciates therefore there will be more demand of domestic goods by foreigners so export increases as they can buy more goods with same amount,

So net export = Export - Import may increase or dercrease depending upon the amount of export and import