If the price level in the United States falls relative to the price level in foreign nations, U.S. exports:

Question

Quizplus · Accepted Answer

When the price level in the United States falls relative to foreign nations, U.S. goods become cheaper for foreigners, increasing U.S. exports. Simultaneously, foreign goods become relatively more expensive for Americans, decreasing U.S. imports. This leads to a higher demand for dollars (to buy U.S. goods) and a lower supply of dollars (since Americans are buying fewer foreign goods).

If the Price Level in the United States Falls Relative