Which Set of Events Would Best Explain the Effects of a Contractionary

question 4

Multiple Choice

Which set of events would best explain the effects of a contractionary fiscal policy on net exports?

• A)It decreases domestic interest rates, causing the dollar to appreciate and net exports to decrease.
• B)It decreases domestic interest rates, causing the dollar to depreciate and net exports to increase.
• C)It decreases domestic interest rates, causing the dollar to depreciate and net exports to decrease.
• D)It increases domestic interest rates, causing the dollar to appreciate and net exports to decrease.

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Definitions:

Formed

Undergone the process of formation or being created or structured in a specific way.

Energy Diagram

A graphical representation that shows the energy levels of the reactants, intermediates, and products in a chemical reaction.

Endothermic Reaction

A chemical reaction that absorbs energy from its surroundings, typically in the form of heat.

Catalyzed

A process in which the rate of a chemical reaction is increased by the presence of a catalyst, which remains unchanged by the reaction.