As the price level falls, the cost of borrowing money will , causing the quantity of output demanded to . this phenomenon is known as the effect. additionally, as the price level falls, 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 . this phenomenon is known as the effect.