What Impact Does a Decrease in the Price Level in Canada

question 100

Multiple Choice

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

• A)A decrease in the price level increases net exports because lower prices increase the value of the dollar.
• B)A decrease in the price level increases net exports by reducing the relative cost of Canadian goods.
• C)A decrease in the price level reduces net exports because lower prices raise the value of the dollar.
• D)A decrease in the price level reduces net exports because lower prices increase American spending on imports.
• E)A decrease in the price level reduces net exports because lower prices reduce the value of the Canadian dollar making exports more costly.

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Definitions:

Modify

Alteration or adjustment to change an existing condition or set of properties.

Indifferent

Having no particular interest or concern; not inclined toward one view, position, or outcome over another.

Direct Fixed Expenses

Costs that are directly associated with a specific department or segment of a business and do not vary with the level of production or sales.

Cash Flow

The aggregate money movement into and out of a company, notably impacting its cash on hand.