Asked by Juliana Gallego on May 07, 2024
Verified
An easy money policy will cause the dollar to
A) depreciate and will increase American net exports.
B) depreciate and will decrease American net exports.
C) appreciate and will increase American net exports.
D) appreciate and will decrease American net exports.
Easy Money Policy
A monetary policy that increases the money supply and lowers interest rates, aimed at stimulating economic growth.
Dollar
A unit of currency used in the United States and some other countries, symbolized by "$".
American Net Exports
The value of exports from the United States minus the value of its imports, expressing the country's trade balance with rest of the world.
- Analyze the effects of monetary policy decisions on the international value of the U.S. dollar and trade balance.
Verified Answer
DD
DilYar DilshatMay 12, 2024
Final Answer :
A
Explanation :
An easy money policy, also known as expansionary monetary policy, involves increasing the money supply, which leads to a decrease in interest rates. This can lead to a depreciation of the dollar, making American exports cheaper and more attractive to foreign buyers, increasing American net exports. Therefore, Choice A is the best answer.
Learning Objectives
- Analyze the effects of monetary policy decisions on the international value of the U.S. dollar and trade balance.