Question

An expansionary monetary policy would be more effective if it caused Group of answer choices a)...

An expansionary monetary policy would be more effective if it caused

Group of answer choices

a) interest rates to decrease, leading to an exchange rate depreciation and a rise in net exports.

b) interest rates to increase, leading to an exchange rate depreciation and a rise in net exports.

c) interest rates to increase, leading to an exchange rate appreciation and a fall in net exports.

d) interest rates to decrease, leading to an exchange rate appreciation and a fall in net exports.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer- Correct option is 'a'

An expansionary monetary policy would be more effective if it caused interest rates to decrease, leading to an exchange rate depreciation and a rise in net exports. Expansionary monetary policy is when a central bank uses its tools to stimulate the economy. That increases the money supply, lowers interest rates and increases demand. It boost the economic growth. It lowers the value of currency thereby decreasing the exchange rate. A lower exchange rates causes exports to increase and import to decrease and the balance of trade or net export to increase.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Monetary policy is more effective if: A. the inflation rate in the country has hovered close...
Monetary policy is more effective if: A. the inflation rate in the country has hovered close to zero for the last three years because nominal interest rates will be lower so expansionary monetary policy will be more effective. B. the inflation rate in the country has averaged 3 percent for the last three years because nominal interest rates will be lower so expansionary monetary policy will be more effective. C. the inflation rate in the country has averaged 3 percent...
•Temporary changes in fiscal policy are more effective in influencing output and employment in the short...
•Temporary changes in fiscal policy are more effective in influencing output and employment in the short run: –The rise in aggregate demand and output due to expansionary fiscal policy raises demand for real monetary assets, putting upward pressure on interest rates and on the value of the domestic currency –To prevent an appreciation of the domestic currency, the central bank must buy foreign assets, thereby increasing the money supply and decreasing interest rates –In effect, under fixed exchange rates an...
Contractionary monetary policy would ______ interest rates and _______ the U.S. dollar, leading to a(an) ________...
Contractionary monetary policy would ______ interest rates and _______ the U.S. dollar, leading to a(an) ________ in U.S. net exports increase, appreciate, decrease decrease, appreciate, increase increase, depreciate, decrease decrease, depreciate, increase
In which of the following cases will expansionary monetary policy be more effective at pulling an...
In which of the following cases will expansionary monetary policy be more effective at pulling an economy out of recession? Assume that the monetary expansion will result in a 5% inflation rate. Choose one or more: A. In the past, the inflation rate has always climbed to around 6% following an expansionary monetary policy. B. The Fed publicly announces that the monetary policy will result in a 5% inflation rate. C. People consistently expect a 0% inflation rate. D. Inflation...
a. Monetary Policy involves changing taxes and government spending/ the design of currency/ exports/ the money...
a. Monetary Policy involves changing taxes and government spending/ the design of currency/ exports/ the money supply.   In the United States, Monetary Policy is implemented by the Federal Reserve/ President and Congress/ Secretary of the Treasury/ states. b. Contractionary Monetary Policy/ Lower prices/ Expansionary MonetaryPolicy/ Larger coins can be used to address a Recessionary Gap; while Expansionary MonetaryPolicy/ smaller coins/ Contractionary Monetary Policy/ higher prices can be used to address an Inflationary Gap. c.  To enact Contractionary Monetary Policy, the central bank...
What happens when there is an expansionary monetary policy under a flexible exchange rate regime to...
What happens when there is an expansionary monetary policy under a flexible exchange rate regime to the exchange rate, interest rate, consumption, investment, and net exports? Be sure to include the IS-LM-UIP diagrams in your answer.
If the US economy is in a recession and the Federal Reserve follows expansionary monetary policy,...
If the US economy is in a recession and the Federal Reserve follows expansionary monetary policy, will the following rise or fall? a. money supply __________ b. excess reserves _________ c. interest rates __________ d. investment ____________ e. aggregate demand _________
With a flexible exchange rate and free capital mobility, an expansionary fiscal policy is: A) Ineffective...
With a flexible exchange rate and free capital mobility, an expansionary fiscal policy is: A) Ineffective because a higher domestic interest rate will crowd out investment B) Very effective because domestic interest rate will not rise and hence crowding out of investment cannot occur C) Ineffective because the exchange rate will appreciate, crowding out net exports D) Very effective because both domestic demand and net exports will rise E) Both B. and D.
Explain whether expansionary fiscal policy and whether expansionary monetary policy will crowd out net exports in...
Explain whether expansionary fiscal policy and whether expansionary monetary policy will crowd out net exports in a flexible exchange rate regime. Assume that the country in question is a small country ( there is perfect capital mobility).
QUESTION 52 A decrease in U.S. interest rates leads to a. a depreciation of the dollar...
QUESTION 52 A decrease in U.S. interest rates leads to a. a depreciation of the dollar that leads to smaller net exports. b. a depreciation of the dollar that leads to greater net exports. c. an appreciation of the dollar that leads to greater net exports. d. an appreciation of the dollar that leads to smaller net exports. 1 points    QUESTION 53 As the price level falls, a. the exchange rate rises, so net exports fall. b. the exchange...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT