Which of the following would be an effect of a decline in the Canadian price level, other things constant?
A) It would stimulate Canadian exports, pushing the aggregate demand curve to the right.
B) It would stimulate Canadian imports, pushing the aggregate demand curve to the right.
C) It would stimulate Canadian exports but discourage imports, causing a rightward movement along a given aggregate demand curve.
D) It would discourage Canadian exports but stimulate imports, causing a rightward movement along a given aggregate demand curve.

Question

Which of the following would be an effect of a decline in the Canadian price level, other things constant?  
A) It would stimulate Canadian exports, pushing the aggregate demand curve to the right. 
B) It would stimulate Canadian imports, pushing the aggregate demand curve to the right. 
C) It would stimulate Canadian exports but discourage imports, causing a rightward movement along a given aggregate demand curve. 
D) It would discourage Canadian exports but stimulate imports, causing a rightward movement along a given aggregate demand curve.

Quizplus · Accepted Answer

A decline in the Canadian price level would make Canadian goods cheaper for foreign buyers, stimulating exports, and make foreign goods relatively more expensive for Canadians, discouraging imports. This results in a rightward movement along the aggregate demand curve.

Which of the Following Would Be an Effect of a Decline