If U.S. prices increase relative to the rest of the world, we would expect imports:
A) to increase and exports to fall.
B) to decrease and exports to increase.
C) as well as exports to increase.
D) as well as exports to decrease.

Question

Quizplus · Accepted Answer

If U.S. prices increase relative to the rest of the world, U.S. goods become more expensive for foreign buyers, leading to a decrease in exports. Conversely, foreign goods become relatively cheaper for U.S. consumers, leading to an increase in imports.

If US Prices Increase Relative to the Rest of the World