A Contractionary Monetary Policy Causes

question 200

Multiple Choice

A contractionary monetary policy causes

• A) higher interest rates, which increases the international price of the dollar and decreases net exports.
• B) higher interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports.
• C) lower interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports.
• D) higher interest rates, which increases the foreign demand for U.S. financial instruments, which causes interest rates to decrease. There is no effect on net exports.

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