Asked by Assata Dockins on May 17, 2024
Verified
If the price level in the U.S.increases,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 increase.
Price Level
The average of current prices across the entire spectrum of goods and services produced in the economy, often measured by a price index.
- Elucidate the effects of price level fluctuations on aggregate demand and aggregate output.
- Understand the worldwide interdependence of economic variations and the impact of price changes on global commerce.
Verified Answer
OM
Orlando MartinezMay 17, 2024
Final Answer :
B
Explanation :
When the price level in the U.S. increases, U.S. products become more expensive relative to foreign products. This makes U.S. goods less attractive to both domestic and foreign buyers, leading to a decrease in the aggregate output demanded.
Learning Objectives
- Elucidate the effects of price level fluctuations on aggregate demand and aggregate output.
- Understand the worldwide interdependence of economic variations and the impact of price changes on global commerce.