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(8) An increase in the money supply in the U.S will not A.cause the U.S interest rate to decline...

Question:

(8) An increase in the money supply in the U.S will not

A.cause the U.S interest rate to decline relative to interest rates in other countries.

B. cause the value of the dollar to decrease relative to other assets.

C. cause the amount of net exports from the U.S to increase, as exports rise and imports fall.

D. cause the value of investing in U.S financial assets to become more desirable to foreign investors.

The Money Market:

Just like in the market for goods and services, the money market is comprised of the money demand and money supply. Money demand is the amount of money that individuals and businesses in the economy are demanding for transaction, speculative and precautionary purposes. Money supply is the amount of money stock that is circulating in the economy at a given period of time.

Answer and Explanation:

The demand for money by households and firms explain why the demand for money depends negatively on the interest rate. An increase in the interest...

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The Money Market: Money Supply and Money Demand Curves

from Economics 102: Macroeconomics

Chapter 11 / Lesson 10
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