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Author Question: When the prices of a country's imports decrease, the prices of domestic goods may decrease. This ... (Read 123 times)

DelorasTo

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Question 1

When U.S. prices are falling relative to those in the rest of the world


◦ U.S. exports tend to increase.
◦ U.S. exports tend to decrease.
◦ U.S. imports tend to increase.
◦ U.S exports and U.S. imports both tend to decrease

Question 2

When the prices of a country's imports decrease, the prices of domestic goods may decrease. This occurs because


◦ a decrease in the prices of imported inputs will cause aggregate supply to decrease.
◦ if import prices fall relative to domestic prices, households will tend to substitute domestically produced goods and services for imports.
◦ if import prices fall relative to domestic prices, households will tend to substitute imports for domestically produced goods and services.
◦ a decrease in the prices of imported inputs will cause aggregate demand to increase.


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Marked as best answer by DelorasTo on Apr 19, 2019

Hdosisshsbshs

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