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If the Fed Reduces the Money Supply to Reduce Inflation

Question 54

Multiple Choice

If the Fed reduces the money supply to reduce inflation:


A) the interest rate will increase, and the price of U.S. exports will rise and the price of U.S. imports will fall.
B) the interest rate will increase, and the price of U.S. exports and U.S. imports will fall.
C) the interest rate will increase, and the price of both U.S. exports and U.S. imports will rise.
D) the interest rate will increase, and the price of U.S. exports will fall and the price of U.S. imports will rise.

Correct Answer:

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