The Net Exports Effect Exists Because A

question 152

Multiple Choice

The net exports effect exists because a:

• A) higher price level will reduce interest rates and stimulate foreign investment.
• B) lower price level will make domestically produced exports less expensive relative to foreign goods.
• C) higher price level will reduce the purchasing power of money.
• D) lower price level will encourage Americans to import more foreign goods.

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Definitions:

Wage Rate

An amount of money that is paid to an employee per unit of time, commonly hourly, daily, or annually, for their labor.

Standard Oil

An American oil producing, transporting, refining, and marketing company. Established in 1870 by John D. Rockefeller and associates, controlling much of the oil industry in the U.S. until it was broken up in 1911.

Trust

A legal arrangement where one party, the trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.

Mergers

The combination of two or more companies into a single entity, often to achieve greater efficiency or market share.