When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is that
A) U.S.-made goods become relatively cheaper compared to French-made goods.
B) French citizens are more likely to buy U.S.-made goods.
C) U.S. citizens are less likely to buy French-made goods.
D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

When the price level in France increases while the exchange rate and the U.S. price level remain the same, U.S.-made goods become relatively cheaper, making them more attractive to French consumers. Consequently, French citizens are more likely to buy U.S.-made goods, and U.S. citizens are less likely to buy French-made goods due to the relative increase in prices.

When the Price Level in France Increases While the Exchange