Solved

Which of the Following Best Describes the Relationship Between Monetary $\uparrow _ { i } \Rightarrow \uparrow R \Rightarrow \uparrow \frac { E P } { P ^ { W } } \Rightarrow \downarrow \frac { E X } { Y }$

Question 69

Multiple Choice

Which of the following best describes the relationship between monetary policy and net exports?

A) $\uparrow _ { i } \Rightarrow \uparrow R \Rightarrow \uparrow \frac { E P } { P ^ { W } } \Rightarrow \downarrow \frac { E X } { Y }$ and $\downarrow \frac { L M } { \bar { Y } } \Rightarrow \uparrow \frac { N X } { \bar { Y } }$

B) $\uparrow _ { i } \Rightarrow \downarrow R \Rightarrow \downarrow \frac { E P } { P ^ { W } } \Rightarrow \downarrow \frac { E X } { Y }$ and $\uparrow \frac { L M } { \bar { Y } } \Rightarrow \downarrow \frac { N X } { \bar { Y } }$

C) $\uparrow _ { i } \Rightarrow \downarrow R \Rightarrow \downarrow \frac { E P } { P ^ { W } } \Rightarrow \downarrow \frac { E X } { Y }$ and $\uparrow \frac { L M } { \bar { Y } } \Rightarrow \uparrow \frac { N X } { \bar { Y } }$

D) $\uparrow _ { i } \Rightarrow \uparrow R \Rightarrow \uparrow \frac { E P } { P ^ { W } } \Rightarrow \uparrow \frac { E X } { Y }$ and $\uparrow \frac { L M } { \bar { Y } } \Rightarrow$ no change $\frac { N X } { \bar { Y } }$

E) $\uparrow _ { i } \Rightarrow \uparrow R \Rightarrow$ no change $\frac { E P } { P ^ { W } } \Rightarrow$ no change $\frac { N X } { \bar { Y } }$