When the domestic price level increases,exports decrease and imports increase.Other things the same,this change is illustrated by a
A)movement upward along the aggregate demand curve.
B)movement downward along the aggregate demand curve.
C)rightward shift of the aggregate demand curve.
D)leftward shift of the aggregate demand curve.
E)rightward shift of the aggregate supply curve.

Question

Quizplus · Accepted Answer

An increase in the domestic price level makes domestic goods more expensive relative to foreign goods, leading to a decrease in exports and an increase in imports. This results in a movement upward along the aggregate demand curve, as the quantity of goods and services demanded decreases at higher price levels.

When the Domestic Price Level Increases,exports Decrease and Imports Increase