With a fixed exchange rate,an increase in the domestic price level will,for a constant foreign price level,

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With a fixed exchange rate, an increase in the domestic price level makes domestic goods more expensive compared to foreign goods, causing a decrease in demand for domestic goods and an increase in demand for foreign goods. This leads to an increase in imports and a decrease in exports, which in turn makes the domestic currency relatively weaker compared to foreign currency. Therefore, foreign goods become relatively cheaper to U.S. citizens while U.S. exports become more expensive to foreign purchasers.

With a Fixed Exchange Rate,an Increase in the Domestic Price