An open market purchase by the Fed causes the value of the dollar to
A) rise, increasing net exports.
B) rise, reducing net exports.
C) fall, increasing net exports.
D) fall, reducing net exports.

Question

Quizplus · Accepted Answer

An open market purchase by the Fed increases the money supply, leading to lower interest rates, which can cause the value of the dollar to fall. A weaker dollar makes U.S. goods cheaper for foreign buyers, thus increasing net exports.

An Open Market Purchase by the Fed Causes the Value