Statement I: If the Fed pursued a tight money policy,investors all over the world would be attracted to the higher interest rates they could earn by purchasing U.S.bonds,corporate bonds,and other assets.
Statement II: Tight money tends to lower our net exports.

Question

Quizplus · Accepted Answer

Statement I is true because a tight money policy typically involves raising interest rates to control inflation, which makes U.S. financial assets more attractive to foreign investors due to higher returns. Statement II is also true because a tight money policy, by raising interest rates, appreciates the domestic currency, making exports more expensive and imports cheaper, thus reducing net exports.

Statement I: If the Fed Pursued a Tight Money Policy,investors