The change in aggregate expenditures resulting from a movement in the domestic price level, which in turn changes the price of domestic goods in relation to foreign goods, is known as the:
A)international trade effect.
B)multilateral equilibrium condition.
C)international exchange rate effect.
D)magnified international pricing effect.
E)international deficit effect.

Question

Quizplus · Accepted Answer

The international trade effect refers to the change in aggregate expenditures due to a change in the domestic price level, which affects the relative price of domestic goods compared to foreign goods, influencing exports and imports.

The Change in Aggregate Expenditures Resulting from a Movement in the Domestic