If other factors are held constant, an increase in the price level
A) causes desired net export spending to rise.
B) causes desired net export spending to fall.
C) causes the real value of the money to increase.
D) induces people to spend their money faster.

Question

Quizplus · Accepted Answer

An increase in the price level will make domestic goods relatively more expensive compared to foreign goods, which will lead to a decrease in exports and an increase in imports. This, in turn, will cause the desired net export spending to fall.

If Other Factors Are Held Constant, an Increase in the Price