If the Price Level Increases, Then

question 112

Multiple Choice

If the price level increases, then

• A) the exchange rate will increase, causing U.S. goods to become cheaper and increasing total planned real expenditures.
• B) imports increase but exports do not change. Therefore, there is no effect on total planned real expenditures.
• C) foreign residents buy fewer U.S. goods, leaving more goods for U.S. residents and an increase in total planned real production by firms.
• D) domestic goods are more expensive relative to foreign goods, which reduces total planed real expenditures.

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