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Question
If the price level increases, then
A) the exchange rate will increase, causing U.S. goods to become cheaper and increasing total planned real expenditures.
B) imports increase but exports do not change. Therefore, there is no effect on total planned real expenditures.
C) foreign residents buy fewer U.S. goods, leaving more goods for U.S. residents and an increase in total planned real production by firms.
D) domestic goods are more expensive relative to foreign goods, which reduces total planed real expenditures.
Answer
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