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.