What impact does an increase in the price level in the United States have on net exports and why?
A)An increase in the price level decreases net exports because higher prices decrease the value of the dollar.
B)An increase in the price level decreases net exports by increasing the relative cost of American goods.
C)An increase in the price level increases net exports because higher prices lower the value of the dollar.
D)An increase in the price level increases net exports because higher prices decrease American spending on imports.

Question

Quizplus · Accepted Answer

An increase in the price level will make American goods relatively more expensive compared to foreign goods. This will lead to a decrease in demand for American goods, which will decrease net exports.

What Impact Does an Increase in the Price Level in the United