Other things equal, if a change in the tastes of American consumers causes them to purchase more foreign goods at each level of U. S. GDP, then: A. unemployment will decrease domestically. B. U. S. real GDP will fall. C. inflation will occur domestically. U. S. real GDP will rise.

Question

Joel Cherry

Business

19 January, 17:04

Other things equal, if a change in the tastes of American consumers causes them to purchase more foreign goods at each level of U. S. GDP, then: A. unemployment will decrease domestically. B. U. S. real GDP will fall. C. inflation will occur domestically. U. S. real GDP will rise.

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Answers (1)

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Dillan Pham · Answer 1

B. U. S. real GDP will fall

Explanation:

United States's real Gross Domestic Product (GDP) will fall, because having American consumers preferring foreign goods instead of locally produced articles, the expected consequence is a reduction in the volume of local manufacturing. This fall will affect negatively the GDP index, as domestic production decreases.