In a two-country world,an increase in foreign input prices,ceteris paribus,
A) shifts the SRAS curve leftward,causing the price level to increase.
B) shifts the SRAS curve leftward,causing the price level to decrease.
C) shifts the SRAS curve rightward,causing the price level to increase.
D) shifts the SRAS curve rightward,causing the price level to decrease.
E) does not affect the SRAS curve or the price level.

Question

Quizplus · Accepted Answer

An increase in foreign input prices will increase the cost of producing goods and services, leading to a decrease in aggregate supply. As a result, the SRAS curve will shift leftward, and the price level will increase.

In a Two-Country World,an Increase in Foreign Input Prices,ceteris Paribus