If U.S. prices increase relative to the rest of the world, we would expect imports to _______ and exports to _______.
A) increase; decrease
B) decrease; increase
C) increase; increase
D) decrease; decrease

Question

Quizplus · Accepted Answer

When U.S. prices increase relative to the rest of the world, imports become more attractive because foreign goods are relatively cheaper, leading to an increase in imports. Conversely, U.S. exports become more expensive for other countries, leading to a decrease in exports.

If US Prices Increase Relative to the Rest of the World