If monetary policy is tight
A) the value of the dollar will rise.
B) it will become easier for businesses to obtain loans.
C) U.S. exports will increase.
D) U.S. imports will decline.

Question

Quizplus · Accepted Answer

When monetary policy is tight, it means there is a decrease in the money supply and an increase in interest rates. This will make holding dollars more attractive and increase demand for them, causing the value of the dollar to rise. It will not make it easier for businesses to obtain loans, and it may actually lead to a decrease in both U.S. exports and imports as a result of reduced economic activity due to higher interest rates.

If Monetary Policy Is Tight