A Contractionary Monetary Policy Would Be More Effective If It

question 42

Multiple Choice

A contractionary monetary policy would be more effective if it caused:

• A)interest rates to increase, leading to an exchange rate appreciation and a fall in net exports.
• B)interest rates to decrease, leading to an exchange rate appreciation and a fall in net exports.
• C)interest rates to decrease, leading to an exchange rate depreciation and a rise in net exports.
• D)interest rates to increase, leading to an exchange rate depreciation and a rise in net exports.

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Definitions:

Merchandise Inventory

The total value of a company's goods that are ready for sale at any given time, including both finished goods and goods in various stages of production.

Consigned Goods

Items that are sent by their manufacturer to a third party, but still remain the property of the manufacturer until sold.

Goods in Transit

Items that have been shipped by a seller but have not yet been received by the buyer.

Days' Sales in Inventory

A measure of how quickly inventory is sold and replaced over a period, calculated by dividing the ending inventory by the cost of goods sold and multiplying by 365.