How Does Contractionary Monetary Policy Affect Net Exports in the Short

question 98

Multiple Choice

How does contractionary monetary policy affect net exports in the short run?

• A)Contractionary monetary policy increases exports and reduces imports.
• B)Contractionary monetary policy reduces exports and increases imports.
• C)Contractionary monetary policy increases exports and increases imports.
• D)Contractionary monetary policy reduces exports and reduces imports.

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Definitions:

Total Utility

The entire satisfaction or pleasure a consumer obtains from consuming a given quantity of goods or services.

Income

The income earned either from work or through investments, typically on a regular basis.

Consumer Equilibrium

The state where the consumer's income is fully allocated to the purchase of goods and services in a way that maximizes their utility or satisfaction.

Indifference Curve

A graph representing a set of bundles of goods between which a consumer is indifferent, showing preferences of consumption.