Statement I: An expansionary monetary policy tends to raise our net exports.
Statement II: Higher interest rates in the United States tend to raise the United States dollar relative to foreign currencies.

Question

Quizplus · Accepted Answer

Statement I is true because an expansionary monetary policy lowers interest rates, which makes domestic goods and services cheaper relative to foreign goods and services, leading to an increase in net exports. Statement II is also true because higher interest rates in the United States make it more attractive for foreign investors to invest in the United States, which increases the demand for the US dollar and raises its value relative to foreign currencies.

Statement I: an Expansionary Monetary Policy Tends to Raise Our