Other things being equal, when the domestic price level falls exogenously,
A)the aggregate expenditure function shifts downward.
B)imports of foreign goods rise.
C)the net export function shifts downward.
D)Canadian goods become more expensive relative to foreign goods.
E)the net export function shifts upward.

Question

Quizplus · Accepted Answer

When the domestic price level falls, domestic goods become cheaper relative to foreign goods, leading to an increase in exports and a decrease in imports, thus shifting the net export function upward.

Other Things Being Equal, When the Domestic Price Level Falls