How Does Contractionary Monetary Policy Affect Interest Rates and Net

question 65

Multiple Choice

How does contractionary monetary policy affect interest rates and net exports in an open economy?

• A)Contractionary monetary policy increases exports and reduces imports because of higher interest rates.
• B)Contractionary monetary policy reduces exports and increases imports because of higher interest rates.
• C)Contractionary monetary policy increases exports and increases imports because of lower interest rates.
• D)Contractionary monetary policy reduces exports and reduces imports because of lower interest rates.

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