The quantity of imports will increase when there is

The quantity of imports will increase when there is

The correct answer and explanation is:

Correct Answer: A decrease in the domestic price level relative to foreign price levels.

Explanation:

The quantity of imports refers to the amount of goods and services purchased from foreign countries. This quantity tends to increase when domestic consumers find foreign goods cheaper or more attractive compared to domestically produced goods. One major factor that influences this is the relative price levels between countries.

When there is a decrease in the domestic price level relative to foreign price levels, foreign goods become less attractive, and domestic goods become more competitive. But the question asks when the quantity of imports will increase, so the correct scenario would actually be when domestic price levels increase relative to foreign prices — or when foreign goods become cheaper in comparison.

Thus, to clarify:

• When the domestic price level increases, foreign goods become relatively cheaper, encouraging consumers and businesses to buy more imports.
• Similarly, if the exchange rate favors the domestic currency (i.e., the domestic currency appreciates), foreign goods also become cheaper, increasing imports.
• Changes in consumer income also affect imports. Higher domestic income levels usually lead to increased demand for both domestic and foreign goods, hence increasing imports.

In short, imports rise when foreign goods become relatively cheaper or when consumers have greater purchasing power.

However, based on standard multiple-choice phrasing, the most accurate general answer is:

The quantity of imports will increase when there is a decrease in the relative price of foreign goods (or, stated differently, when foreign goods become cheaper relative to domestic goods).

This shift in relative prices makes imports more attractive, leading to a higher quantity of imported goods entering the domestic market.