When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is
A) U.S. citizens are less likely to buy French-made goods.
B) U.S.-made goods become relatively cheaper compared to French-made goods.
C) French citizens are more likely to buy U.S.-made goods.
D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

When the price level in France increases, French goods become more expensive relative to U.S. goods. This makes U.S. citizens less likely to buy French goods (A), makes U.S.-made goods relatively cheaper (B), and encourages French citizens to buy more U.S.-made goods (C). Therefore, all statements are correct.

When the Price Level in France Increases While the Exchange