In an open economy, as the price level increases, the quantity demanded of domestic goods _____, resulting in a(n) _____ in the quantity of real GDP demanded.
A)increases; decrease
B)increases; increase
C)decreases; decrease
D)decreases; increase
E)remains constant; increase

Question

In an open economy, as the price level increases, the quantity demanded of domestic goods _____, resulting in a(n) _____ in the quantity of real GDP demanded.
A)increases; decrease​
B)increases; increase
C)decreases; decrease
D)decreases; increase
E)remains constant; increase

Quizplus · Accepted Answer

When the price level increases in an open economy, the quantity demanded of domestic goods decreases because domestic goods become relatively more expensive compared to foreign goods. This results in a decrease in the quantity of real GDP demanded.

In an Open Economy, as the Price Level Increases, the Quantity