As a nation begins to export, its own relative price of exported goods will ______, and as it imports other goods, the relative price of those will ______ , thus ___________ its standard of living.
A) fall; rise; lowering
B) rise; fall; lowering
C) rise; fall; raising
D) fall; rise; raising

Question

Quizplus · Accepted Answer

When a nation begins to export, the demand for its goods increases in the foreign market, causing the relative price of exported goods to rise. On the other hand, as the nation imports other goods, the supply of those goods increases in the domestic market, causing their relative price to fall. This process raises the standard of living of the nation as it can sell its goods at a higher price and buy other goods at a lower price. Therefore, the best choice is C, as it correctly describes the rise in the relative price of exported goods and the fall in the relative price of imported goods, resulting in raising the nation's standard of living.

As a Nation Begins to Export, Its Own Relative Price