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If the Rate of Inflation Overseas Rises Relative to the Rate

question 81

Multiple Choice

If the rate of inflation overseas rises relative to the rate of inflation in the United States, U.S. net exports will tend to ____, causing the exchange value of the U.S. dollar to ____.


Definitions:

Price Elasticity

An assessment of the sensitivity of the demand for an item to shifts in its cost.

Strawberry Ice Cream

A frozen dessert made from dairy ingredients such as milk and cream, sweetened and flavored with strawberries.

Price-elastic

A characteristic of a good or service indicating a high sensitivity to changes in its price, where a small price change leads to a significant change in quantity demanded or supplied.

Price Elasticity

A measure of the sensitivity of quantity demanded or supplied to changes in price.

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