If prices in the United States rose, which of the following could be directly attributed to the international substitution effect?
A) Americans reduce their purchases of Japanese cars.
B) Australians buy more American surfboards.
C) Europeans purchase fewer American-made personal computers.
D) Americans sell more wheat to India.

Question

Quizplus · Accepted Answer

The international substitution effect states that when the price of a good in one country increases, consumers in other countries will switch to substitute goods from other countries. Therefore, if prices in the United States rise, Europeans may purchase fewer American-made personal computers and switch to buying them from other countries. The other choices are not directly related to the international substitution effect.

If Prices in the United States Rose, Which of the Following