Contractionary Monetary Policy Tends To

question 12

Multiple Choice

Contractionary monetary policy tends to:

• A)lower U.S. prices, make exports more expensive relative to imports, and lower the value of the dollar.
• B)lower U.S. prices, make exports cheaper relative to imports, and raise the value of the dollar.
• C)raise U.S. prices, make exports cheaper relative to imports, and raise the value of the dollar.
• D)raise U.S. prices, make exports more expensive relative to imports, and lower the value of the dollar.

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Definitions:

Normal Good

a good for which demand increases when consumer income rises, and falls when consumer income decreases.

Equilibrium Price

The market price at which the quantity demanded of a good equals the quantity supplied, leading to market balance.

Video Game Discs

Physical media used for storing video game content for use on consoles and computers.

Excess Supply

Excess Supply, also known as surplus, occurs when the quantity supplied of a good exceeds the quantity demanded at the current price.