When the price level falls
A. there is no impact on imports or exports, so there is no associated movement along the aggregate demand curve.
B. imports decrease and exports increase, which cause a movement down along the aggregate demand curve.
C. imports increase, and exports decrease, which causes a movement up along the aggregate demand curve.
D. imports decrease and exports increase, which cause a movement up along the aggregate demand curve.
Answer: B
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Two goods that are substitutes are
a. bacon and eggs b. camera and film c. tennis racket and tennis balls d. movie theater tickets and DVD rentals e. coffee and cream
A country that must inhibit imports should give preference to
A. quotas over tariffs because quotas are less likely to distort trade patterns between nations. B. tariffs over quotas because, unlike quotas, tariffs offer no special benefits to inefficient exporters. C. export subsidies over quotas or tariffs because export subsidies can protect a nation’s domestic producers. D. an embargo wherever possible because an embargo can serve as a political weapon in addition to being a “trade stopper.”