Asked by Roberta Velescu on May 12, 2024
Verified
If the price level in the U.S.decreases,aggregate output demanded:
A) decreases because U.S.products become cheaper relative to foreign products.
B) decreases because U.S.products become more expensive relative to foreign products.
C) increases because U.S.products become cheaper relative to foreign products.
D) increases because U.S.products become more expensive relative to foreign products.
E) decreases because household wealth and spending in the U.S.decrease.
Price Level
An index indicating the general pricing trends in an economy, reflecting the cost living and purchasing power.
Aggregate Output
A composite measure of all final goods and services produced in an economy during a given period; real GDP.
- Clarify the influence of price level variations on overall demand and total output in the economy.
- Comprehend the international linkage of economic shifts and how price fluctuations influence international trade activities.
Verified Answer
RT
Reyna TinajeroMay 19, 2024
Final Answer :
C
Explanation :
When the price level in the U.S. decreases, U.S. products become cheaper relative to foreign products, which typically leads to an increase in aggregate output demanded as consumers both domestically and internationally are more likely to purchase these cheaper goods.
Learning Objectives
- Clarify the influence of price level variations on overall demand and total output in the economy.
- Comprehend the international linkage of economic shifts and how price fluctuations influence international trade activities.