Asked by Camila Almeida on Jul 01, 2024

verifed

Verified

Other things the same, as the price level decreases it induces greater spending on

A) both net exports and investment.
B) net exports but not investment.
C) investment but not net exports.
D) neither net exports nor investment.

Net Exports

The value of a country's total exports minus the value of its total imports; it is a component of a country's gross domestic product.

Investment

The expenditure on capital assets that may yield returns in the future, such as stocks, bonds, or physical property.

Price Level

A comprehensive mean of the existing prices for the economy's produced goods and services.

  • Understand the factors that influence aggregate demand and how changes in price levels affect spending on net exports and investment.
verifed

Verified Answer

HE
Hamidreza Ensandoust6 days ago
Final Answer :
A
Explanation :
When the price level decreases, it makes a country's goods cheaper relative to foreign goods, which increases net exports. Additionally, lower price levels reduce interest rates, which encourages more investment.