A decrease in interest rates
A)increases the value of the dollar,net exports,and equilibrium output.
B)increases the value of the dollar,reducing net exports and equilibrium output.
C)reduces the value of the dollar,net exports,and equilibrium output.
D)reduces the value of the dollar,increasing net exports and equilibrium output.

Question

Quizplus · Accepted Answer

A decrease in interest rates would lead to a reduction in the value of the dollar since it makes investments in the US less attractive. This would result in an increase in net exports since US goods would become cheaper for foreign buyers, leading to an increase in equilibrium output.

A Decrease in Interest Rates