A contractionary monetary policy causes
A) higher interest rates, which increases the foreign demand for U.S. financial instruments, which causes interest rates to decrease. There is no effect on net exports.
B) higher interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports.
C) higher interest rates, which increases the international price of the dollar and decreases net exports.
D) lower interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports.
C
You might also like to view...
Asymmetric information is
A) when a market failure occurs. B) an externality. C) when the producer has information on the product that the consumer lacks. D) the regulatory price for a natural monopoly.
Which of the following is considered a legitimate concern of a large public debt?
A. Bankruptcy of the federal government. B. Crowding-out of private investment. C. Burdening future generations. D. Collapse of the financial system.
A monopolist always earns an economic profit
a. True b. False Indicate whether the statement is true or false
An excess demand for money exists if the interest rate is below the equilibrium rate
a. True b. False