In an open economy, expansionary monetary policy will cause
A)consumption, investment, and net exports to rise.
B)consumption and investment to rise, but net exports will fall.
C)consumption to rise, but investment and net exports will fall.
D)consumption to fall, but investment and net exports will rise.
E)consumption and investment to fall, but net exports will rise.

Question

Quizplus · Accepted Answer

Expansionary monetary policy typically lowers interest rates, which boosts consumption and investment. It also tends to depreciate the currency, making exports cheaper and imports more expensive, thus increasing net exports.

In an Open Economy, Expansionary Monetary Policy Will Cause