In an open economy, when the Fed increases the supply of money, it will increase net exports and aggregate demand.

Name: In an open economy, when the Fed increases the supply of money, it will increase net exports and aggregate demand.
Brand: Quizplus
Rating: 4.8 (35 reviews)

Question

Quizplus · Accepted Answer

Increasing the money supply typically lowers interest rates, which can lead to a depreciation of the currency. This makes exports cheaper and imports more expensive, potentially increasing net exports and aggregate demand.

In an Open Economy, When the Fed Increases the Supply