An increase in the money supply tends to _____ the foreign exchange value of the dollar, which will cause net exports to:
A) increase; decrease.
B) increase; increase.
C) decrease; decrease.
D) decrease; increase.

Question

Quizplus · Accepted Answer

An increase in the money supply typically leads to a decrease in the foreign exchange value of the dollar, making U.S. goods cheaper for foreigners and thus increasing net exports.

An Increase in the Money Supply Tends to _____ the Foreign