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Ilovebacon22 Ilovebacon22
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When the prices of a country's imports decrease, the prices of domestic goods may decrease. This occurs because



▸ a decrease in the prices of imported inputs will cause aggregate supply to decrease.

▸ if import prices fall relative to domestic prices, households will tend to substitute domestically produced goods and services for imports.

▸ if import prices fall relative to domestic prices, households will tend to substitute imports for domestically produced goods and services.

▸ a decrease in the prices of imported inputs will cause aggregate demand to increase.
Textbook 
Principles of Economics

Principles of Economics


Edition: 12th
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katiewillkatiewill
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Ilovebacon22 Author
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5 years ago
I appreciate what you did here, answered it correctly Smiling Face with Open Mouth
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