Given a system of floating exchange rates,an expansionary monetary policy by the Federal Reserve will cause
A) the dollar to appreciate and will decrease U.S.net exports
B) the dollar to appreciate and will increase U.S.net exports
C) the dollar to depreciate and will increase U.S.net exports
D) the dollar to depreciate and will decrease U.S.net exports

Question

Quizplus · Accepted Answer

An expansionary monetary policy typically lowers interest rates, leading to a depreciation of the dollar, which makes U.S. goods cheaper abroad and increases net exports.

Given a System of Floating Exchange Rates,an Expansionary Monetary Policy