A decrease in the U.S. price level will:
A)decrease the purchasing power of the U.S. dollar.
B)make foreign goods costlier for U.S. consumers.
C)decrease the supply of funds to the loanable funds market.
D)increase the real rate of interest.
E)encourage people to hold more money.

Question

Quizplus · Accepted Answer

A decrease in the U.S. price level makes domestic goods cheaper relative to foreign goods, thus making foreign goods costlier for U.S. consumers.

A Decrease in the U.S. Price Level Will