An increase in U.S. prices relative to Japanese prices will
A) increase total planned spending on U.S. goods and services.
B) increase U.S. imports and decrease U.S. exports.
C) decrease U.S. imports and increase U.S. exports.
D) decrease both U.S. exports and imports.

Question

Quizplus · Accepted Answer

An increase in U.S. prices relative to Japanese prices will make U.S. goods and services relatively more expensive than Japanese goods and services. This will lead to a decrease in demand for U.S. exports and an increase in demand for Japanese imports, resulting in a decrease in U.S. exports and an increase in U.S. imports (option B).

An Increase in U