An increase in the price level in Japan relative to the price level in the United States would
A)increase U.S.net exports and increase aggregate demand.
B)increase U.S.net exports and increase aggregate supply.
C)reduce U.S.net exports and reduce aggregate demand.
D)reduce U.S.net exports and increase aggregate demand.

Question

Quizplus · Accepted Answer

An increase in the price level in Japan relative to the United States makes U.S. goods relatively cheaper, leading to an increase in U.S. exports to Japan, thus increasing U.S. net exports and aggregate demand.

An Increase in the Price Level in Japan Relative to the Price