When an economy’s price level falls, ceteris paribus, the domestic price level relative to the price level in other countries willfall . this means that domestic exports will be relatively expensive than before, while foreign imports will be relatively expensive than they were previously. 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 . this phenomenon is known as the effect.