If the price level in the United States increases relative to other countries, then the United States will export A. more goods and services B. the same amount of goods and services C. fewer goods and services and the United States will import A. more goods and services. B. the same amount of goods and services. C. fewer goods and services.

Question

Nelson Douglas

Business

26 November, 18:40

If the price level in the United States increases relative to other countries, then the United States will export A. more goods and services B. the same amount of goods and services C. fewer goods and services and the United States will import A. more goods and services. B. the same amount of goods and services. C. fewer goods and services.

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Answers (1)

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Aden Osborn · Answer 1

The correct answer is: option C; option A.

Explanation:

If the price level in the United States increases relative to other countries, this implies that the goods and services in the United States have become relatively expensive.

So the foreign consumers will decrease the demand for US products. As a result, the exports from the United States will decrease.

The imports, on the other hand, will increase as the domestic consumers will prefer cheaper imported products over expensive domestic products.

So the exports will decrease and imports will increase. This will cause net exports to decline.