With international trade, a higher world price will ultimately _____ quantity demanded in the domestic country and _____ quantity exported.

Question

Quizplus · Accepted Answer

When the world price is higher, it makes foreign goods more expensive compared to domestic goods, leading to a decrease in quantity demanded domestically. Simultaneously, domestic producers are incentivized to export more due to higher prices, thus increasing the quantity exported.

With International Trade, a Higher World Price Will Ultimately _____