What impact does a decrease in the price level in the United States have on net exports and why?

Question

Quizplus · Accepted Answer

A decrease in the price level reduces the relative cost of American goods, making them more attractive to foreign buyers. As a result, net exports increase. Option A is incorrect because a decrease in the price level would reduce the value of the dollar, making American goods cheaper for foreign buyers. Option C is incorrect because a decrease in the price level would reduce the value of the dollar and make American goods cheaper, leading to an increase in net exports. Option D is incorrect because a decrease in the price level reduces the cost of American goods, which would decrease spending on imports, rather than increase it.

What Impact Does a Decrease in the Price Level in the United