What effect does a contractionary monetary policy in the U.S. have on the foreign trade sector?
A. The lower value of the dollar will decrease imports and increase exports.
B. The higher value of the dollar will decrease imports and increase exports.
C. The higher value of the dollar will decrease exports and increase imports.
D. The lower value of the dollar will decrease exports and increase imports.
Answer: C
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According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in
A) V, the velocity of circulation. B) P, the price level. C) Y, real GDP. D) R, the interest rate.
Countries import goods in which they have:
a. an absolute advantage. b. a comparative advantage. c. a reputation for good product quality. d. a comparative disadvantage. e. a surplus domestic production.
You are the mayor of your home town, and one day you arrive at city hall to find angry voters demonstrating against you. They are mad because your office created a garbage-collection monopoly by awarding only one company a permit to collect garbage in
your town. The voters claim that the company is overcharging and providing poor service. They want you to do something that will lower rates and improve service. You call your staff economist, who presents evidence that there are substantial increasing economies of scale to garbage collection. What are your options if you are interested in efficiency?
Which of the following items is counted as part of government purchases?
a. The federal government pays the salary of a Navy officer. b. The state of Nevada pays a private firm to repair a Nevada state highway. c. The city of Las Vegas, Nevada pays a private firm to collect garbage in that city. d. All of the above are correct.