where "NX" is net exports, "e" is the nominal exchange rate (the price of foreign currency in terms of units of the domestic currency), "Y" is GDP, and "Y*" is the combined GDP of countries that are foreign trading partners. Higher domestic income (GDP) leads to more spending on imports and hence lower net exports; higher foreign income leads to higher spending by foreigners on the country's exports and thus higher net exports. A higher "e" leads to higher net exports.