If U.S. prices increase relative to the rest of the world, we would expect:
A) net exports to increase.
B) net exports to decrease.
C) net exports to be unaffected.
D) government spending to increase.

Question

Quizplus · Accepted Answer

If U.S. prices increase relative to the rest of the world, it would make U.S. goods relatively more expensive, leading to a decrease in net exports as foreign buyers switch to cheaper alternative goods from other countries.

If US Prices Increase Relative to the Rest of the World