If the Price Level Increases in the United States Relative

question 112

Multiple Choice

If the price level increases in the United States relative to foreign countries, then American consumers will purchase more foreign goods and fewer U.S. goods. This statement describes

• A) the output effect.
• B) the foreign purchases effect.
• C) the real-balances effect.
• D) the shift-of-spending effect.

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Definitions:

Expense Account

An account in which businesses record and track expenditures related to specific activities, such as travel or entertainment, for accounting purposes.

Credit Postings

Entries made on the credit side of an account, indicating an increase in liabilities, revenue, or equity and a decrease in assets.

Debit Postings

Entries made on the left side of a ledger account, indicating an increase in assets or expenses or a decrease in liabilities, equity, or revenue.

Account Balance

An account balance refers to the amount of money held in a financial repository, typically a bank account, at any given moment.