When the Prices of a Country's Imports Increase, the Prices

Multiple Choice

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

A) an increase in the prices of imported inputs will cause aggregate supply to increase.
B) if import prices rise relative to domestic prices, households will tend to substitute domestically produced goods and services for imports.
C) if import prices rise relative to domestic prices, households will tend to substitute imports for domestically produced goods and services.
D) an increase in the prices of imported inputs will cause aggregate demand to decrease.