Question

Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dollar to ________ in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore ________, and the number of foreign products purchased by domestic consumers and firms (imports) will ________. Net exports will therefore ______, causing the quantity of domestic output demanded to ________.

Answer 1

Answer: Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dollar to rise in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore fall, and the number of foreign products purchased by domestic consumers and firms (imports) will rise. Net exports will therefore fall, causing the quantity of domestic output demanded to fall.

Explanation: This is known as Exchange Rate. A foreign exchange rate is the relative value between two currencies. Simply put, "exchange rates are the amount of one currency you can exchange for another." In travel, the exchange rate is defined by how much money, or the amount of a foreign currency, that you can buy with one US dollar

Answer 2

Answer:

Rise; fall; rise; fall; fall

Explanation:

Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dollar to rise in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore fall, and the number of foreign products purchased by domestic consumers and firms (imports) will rise. Net exports will therefore fall, causing the quantity of domestic output demanded to fall.