Imports have the potential to lower a country's inflation rate because of each of the following EXCEPT:
A) the import of lower priced goods limits what domestic competitors can charge for goods.
B) the import of lower priced services limits what domestic competitors can charge for services.
C) the higher prices of foreign goods spurs domestic competitors to cut prices.
D) all of the above

Question

Quizplus · Accepted Answer

Imports of lower priced goods and services can limit what domestic competitors can charge, leading to lower inflation rates. Additionally, the competition provided by foreign goods may lead domestic companies to cut prices in order to remain competitive. Therefore, options A and B are correct. Option C is incorrect because higher prices of foreign goods would not necessarily lead to a decrease in inflation rates, but rather an increase in the inflation rate of imported goods.

Imports Have the Potential to Lower a Country's Inflation Rate