The price feedback effect explains how an increase in the price level in one country can drive up prices in other countries, which, in turn, further increases the price level in the first country.

Question

Quizplus · Accepted Answer

This is a correct statement about the price feedback effect. An increase in the price level in one country can lead to higher import prices, which can cause inflationary pressures in other countries. This can lead to a cycle of increasing prices, known as the price feedback effect.

The Price Feedback Effect Explains How an Increase in the Price