Multiple Choice
What impact does a decrease in the price level in Canada have on net exports and why?
A) A decrease in the price level increases net exports because lower prices increase the value of the dollar.
B) A decrease in the price level increases net exports by reducing the relative cost of Canadian goods.
C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar.
D) A decrease in the price level reduces net exports because lower prices increase American spending on imports.
E) A decrease in the price level reduces net exports because lower prices reduce the value of the Canadian dollar making exports more costly.
Correct Answer:
Verified
Correct Answer:
Verified
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