During the 1970s, U.S. prices generally rose faster than prices in other parts of the world. Which of the following changes would the open economy effect predict took place in response to these price level changes?
a. Americans reduced the proportion of foreign goods bought since their foreign prices became relatively lower.
b. Americans reduced the amount of investment they undertook because interest rates increased.
c. Americans reduced the amount of goods and services they wanted to purchase for consumption because they felt less wealthy.
d. Americans reduced the fraction of purchases they made from domestic producers of goods and services, since foreign prices became relatively lower.
Question 2
The United States is the largest consumer and importer of grains and other agricultural output in the world.
a. True
b. False
Indicate whether the statement is true or false
Gasoline prices
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