An increase in the price level in Australia, ceteris paribus, will reduce imports and increase exports.

Question

Quizplus · Accepted Answer

An increase in the price level in Australia, ceteris paribus, makes Australian goods more expensive relative to foreign goods. This would likely reduce exports because Australian goods become less competitive abroad, and increase imports as consumers and businesses look for cheaper alternatives from other countries.

An Increase in the Price Level in Australia, Ceteris Paribus