A contractionary monetary policy tends to ____ the United States dollar relative to foreign currencies,and to _____ our balance of trade.

Question

Quizplus · Accepted Answer

A contractionary monetary policy typically involves increasing interest rates, which tends to attract foreign capital due to higher returns, thus raising the value of the domestic currency. However, a stronger currency can make exports more expensive and imports cheaper, potentially worsening the balance of trade.

A Contractionary Monetary Policy Tends to ____ the United States