Suppose the United States experiences a long period of inflation relative to other countries. How will this affect U.S. net exports?
What will be an ideal response?
If inflation in the United States is higher than inflation in other countries, then prices of products and services produced in the United States increase more rapidly than the prices of products and services of other countries. This difference in the price levels decreases the demand for U.S. goods relative to foreign goods. U.S. exports decrease, imports increase, and U.S. net exports decline.
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Suppose that the country of Pacifica imposes a quota on bananas. The reason that the government imposed this trade restriction could be
A) that the government of Pacifica needs to increase its revenue. B) lobbying from banana farmers in Pacifica. C) comparative advantage. D) Both answers A and B are correct.
The largest labor union in the United States is the
A) National Education Association. B) International Brotherhood of Teamsters. C) United Food and Commercial Workers International Union. D) Service Employees International Union.