Other things being equal,what is the effect of an exogenous fall in the domestic price level?
A)Canadian goods become more expensive relative to foreign goods.
B)The net export function shifts upward.
C)The aggregate expenditure function shifts downward.
D)Imports of foreign goods rise.
E)The net export function shifts downward.

Question

Quizplus · Accepted Answer

An exogenous fall in the domestic price level will lead to a decrease in the relative price of domestic goods compared to foreign goods. This will make Canadian goods relatively cheaper, which will lead to an increase in demand for Canadian goods from foreign countries. As a result, the net export function will shift upward.

Other Things Being Equal,what Is the Effect of an Exogenous