As the U.S. price level decreases, other things equal, U.S. products become
A)more expensive abroad, which decreases U.S. exports
B)less expensive abroad, which increases U.S. exports
C)more expensive abroad, which has no effect on U.S. exports, since exports are assumed to be constant
D)less expensive abroad, which has no effect on U.S. exports, since exports are assumed to be constant
E)more expensive abroad, which increases U.S. exports

Question

Quizplus · Accepted Answer

When the U.S. price level decreases, U.S. products become less expensive abroad, which increases the attractiveness of U.S. products and leads to an increase in U.S. exports. This is because foreign buyers can purchase more U.S. goods with their currency, increasing demand for U.S. products.

As the US Price Level Decreases, Other Things Equal, U