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.