If the U.S. price level decreases, other things equal, U.S. net exports will
A)increase
B)decrease
C)remain constant, since net exports are assumed to be constant
D)increase only if the marginal propensity to import also increases
E)increase only if there is inflation abroad

Question

Quizplus · Accepted Answer

If the U.S. price level decreases, U.S. goods will become relatively cheaper compared to foreign products, which will increase demand for U.S. exports. This will lead to an increase in U.S. net exports.

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