Suppose There Was a Large Increase in Net Exports

question 12

Multiple Choice

Suppose there was a large increase in net exports. If the Fed wanted to stabilize output, it could

• A)increase the money supply, which will reduce interest rates.
• B)decrease the money supply, which will reduce interest rates.
• C)increase the money supply, which will increase interest rates.
• D)decrease the money supply, which will increase interest rates.

---

Definitions:

Delusions

Strongly held false beliefs or opinions, despite being contradicted by reality or rational argument, typically due to mental illness.

Fatigue

A state of physical or mental weariness resulting from exertion, which can diminish capacity for work and efficiency of function.

Cognitive Theory

A theory in psychology that emphasizes internal states and processes, such as perception, thought, problem-solving, and memory, as fundamental in understanding behavior.

Depression

A mental health disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.