If the Fed pursues an expansionary monetary policy,investment in the United States will ________ and net exports will ________.
A)decrease; decrease
B)decrease; increase
C)increase; decrease
D)increase; increase

Question

Quizplus · Accepted Answer

An expansionary monetary policy typically lowers interest rates, which makes borrowing cheaper. This encourages more investment. Lower interest rates can also lead to a depreciation of the domestic currency, making exports cheaper and imports more expensive, thus increasing net exports.

If the Fed Pursues an Expansionary Monetary Policy,investment in the United