If Prices of the Goods and Services in the Domestic

Multiple Choice

If prices of the goods and services in the domestic market rise relative to those in foreign markets

A) households and firms will buy more foreign products and less domestic products, thereby decreasing net exports.
B) households and firms will buy more foreign products and less domestic products, thereby increasing net exports.
C) exports will rise and imports will fall, leading to an increase in net exports.
D) the exchange rate will rise, leading to an increase in exports.