If a nation imports a good when the economy is opened to trade,the domestic price of the good will _ and domestic consumption will _.

A) rise;rise
B) rise;fall
C) fall;rise
D) fall;fall

Question

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _____ and domestic consumption will _____.A) rise;riseB) rise;fallC) fall;riseD) fall;fall

Jordan DeCampos · Accepted Answer

Final Answer : C, Explanation :  When a nation opens its economy to trade, it allows foreign producers to compete with domestic producers in the domestic market. This increased competition drives down the domestic price of the good, as foreign producers are often able to produce goods at a lower cost. As a result, domestic consumption of the good will rise, as consumers will be able to purchase the good at a lower price than previously. Therefore, choice C is the correct answer.

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _ and domestic consumption will _.

A) rise;rise
B) rise;fall
C) fall;rise
D) fall;fall

Definitions

Learning Objectives

Learning Objectives

Related questions