Ceteris paribus, a decline in the general price level in the United States will make foreign-produced goods relatively more expensive to the U.S. residents and increase the aggregate demand of domestic goods.

Question

Quizplus · Accepted Answer

When the general price level in the United States declines, it makes foreign-produced goods relatively more expensive compared to domestic goods. As a result, U.S. residents are likely to increase the demand for domestic goods, which would increase the aggregate demand of domestic goods. Ceteris paribus means other things remaining constant or unchanged.

Ceteris Paribus, a Decline in the General Price Level in the United