In an open economy as the price level decreases, a(n) ____ in demand for domestic goods relative to foreign goods results in a(n) ____ in the quantity of RGDP demanded.
A)increase, decrease
B)increase, increase
C)decrease, decrease
D)decrease, increase

Question

In an open economy as the price level decreases, a(n) ____ in demand for domestic goods relative to foreign goods results in a(n) ____ in the quantity of RGDP demanded.
A)​increase, decrease
B)​increase, increase
C)​decrease, decrease
D)​decrease, increase

Quizplus · Accepted Answer

When the price level decreases in an open economy, domestic goods become relatively cheaper compared to foreign goods. This leads to an increase in demand for domestic goods relative to foreign goods, which in turn results in an increase in the quantity of Real Gross Domestic Product (RGDP) demanded.

In an Open Economy as the Price Level Decreases, A(n)