If Domestic and Foreign Prices Rise by the Same Relative

question 36

Multiple Choice

If domestic and foreign prices rise by the same relative amount, what will happen to the trade balance?

• A) It will rise.
• B) Nothing will happen.
• C) It will fall.
• D) Not enough information is provided to answer the question.

---

Definitions:

Civil Actions

Legal proceedings initiated by a private individual or entity seeking to enforce a right or redress a wrong, rather than to prosecute a criminal act.

Commercial Activity

Any type of business or transaction engaged in for the purpose of generating profit.

International Agreements

Treaties or accords between countries governing relationships, trade, and other international matters.

Executive Agreements

International agreements made by the executive branch of a government without legislative approval, often simpler than formal treaties.