When the price level in the United States falls relative to the price level of other countries,______, will fall,_______ will rise, and _______ will rise.
a) exports; imports; net exports
b) net exports; imports; exports
c) net exports; exports; imports
d) imports; exports; net exports
I think it is B. Not sure though.
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Verified answer
If the price level falls in the U.S., things are cheaper in the U.S. and more expensive in the other countries.
So, people will buy more stuff from the U.S. (exports increase).
The U.S. will buy less stuff from other countries (imports decrease).
NX = X-I ---> net exports increase. (X increased, I decreased, bigger number than originally - smaller number than originally = bigger number)
D.