An increase in the money supply by the Federal Reserve is likely to increase
I. net exports.
II. the exchange rate.
III. interest rates.
IV. aggregate demand.

Question

An increase in the money supply by the Federal Reserve is likely to increase 
I. net exports.
II. the exchange rate.
III. interest rates.
IV. aggregate demand.

Quizplus · Accepted Answer

An increase in the money supply typically lowers interest rates, which can lead to a depreciation of the exchange rate, making exports cheaper and increasing net exports. It also increases aggregate demand by making borrowing cheaper and encouraging spending.

An Increase in the Money Supply by the Federal Reserve