If the price level in the United States increases, domestic goods will become relatively more expensive than foreign goods. Consumers will import more and reduce the quantity of domestic goods and services they buy.

Question

Quizplus · Accepted Answer

This is because when the price level increases, the currency becomes relatively more expensive, leading to a decrease in exports and an increase in imports. As a result, consumers tend to buy more foreign goods due to their relatively lower prices compared to domestic goods, leading to a decrease in the quantity of domestic goods and services bought.

If the Price Level in the United States Increases, Domestic