You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when imported inputs become cheaper?
A)Both prices and GDP increase.
B)Both prices and GDP decrease.
C)Prices increase, and GDP decreases.
D)Prices decrease, and GDP increases.

Question

Quizplus · Accepted Answer

When imported inputs become cheaper, the cost of production decreases for firms that rely on those inputs. This results in lower prices for consumers and potentially higher sales due to increased demand. As a result, GDP could increase due to increased production and sales with a lower cost of production.

You Are an Analyst Preparing a Forecast of the Effects