The foreign purchases effect suggests that a:

A.Fall in our domestic price level will increase our imports and reduce our exports, thereby reducing the net exports component of aggregate demand
B.Fall in our domestic price level will decrease our imports and increase our exports, thereby reducing the net exports component of aggregate demand
C.Rise in our domestic price level will increase our imports and reduce our exports, thereby reducing the net exports component of aggregate demand
D.Rise in our domestic price level will decrease our imports and increase our exports, thereby reducing the net exports component of aggregate demand

ANSWER:

C