What impact does a decrease in the price level in the United States have on net exports and why?
A)A decrease in the U.S.price level increases net exports because lower prices increase the value of the dollar.
B)A decrease in the U.S.price level increases net exports by reducing the relative cost of American goods.
C)A decrease in the U.S.price level reduces net exports because lower prices raise the value of the dollar.
D)A decrease in the U.S.price level reduces net exports because lower prices increase American spending on imports.

Question

Quizplus · Accepted Answer

When the U.S. price level decreases, American goods become relatively cheaper compared to foreign goods. As a result, demand for American goods increases, leading to an increase in net exports.

What Impact Does a Decrease in the Price Level in the United