If U.S. prices increase relative to the rest of the world, we would expect:
A) net exports to increase.
B) net exports to decrease.
C) imports to decrease.
D) imports to remain unaffected.

Question

Quizplus · Accepted Answer

If U.S. prices increase relative to the rest of the world, it would make U.S. goods more expensive compared to the rest of the world. This would decrease net exports as foreign countries would be less likely to buy U.S. goods. Additionally, it would make imported goods relatively cheaper, which would increase imports.

If US Prices Increase Relative to the Rest of the World