Which of the following sequences of events is accurate? a. Contractionary monetary policy --> interest rates rise --> real GDP falls --> total income falls --> imports rise --> net exports fall b. Contractionary monetary policy --> interest rates fall --> real GDP rises --> total income rises --> imports rise --> net exports fall c. Contractionary monetary policy --> interest rates rise --> real GDP rises --> total income rises --> imports rise --> net exports fall d. Contractionary monetary policy --> interest rates rise --> real GDP falls --> total income falls --> imports fall --> net exports rise
Which of the following sequences of events is accurate? a. Contractionary monetary policy --> interest rates rise --> real GDP falls --> total income falls --> imports rise --> net exports fall b. Contractionary monetary policy --> interest rates fall --> real GDP rises --> total income rises --> imports rise --> net exports fall c. Contractionary monetary policy --> interest rates rise --> real GDP rises --> total income rises --> imports rise --> net exports fall d. Contractionary monetary policy --> interest rates rise --> real GDP falls --> total income falls --> imports fall --> net exports rise
Chapter15: The Debate Over Monetary And Fiscal Policy
Section: Chapter Questions
Problem 8DQ
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Question
Which of the following sequences of events is accurate?
a. Contractionary
b. Contractionary monetary policy --> interest rates fall --> real GDP rises --> total income rises --> imports rise --> net exports fall
c. Contractionary monetary policy --> interest rates rise --> real GDP rises --> total income rises --> imports rise --> net exports fall
d. Contractionary monetary policy --> interest rates rise --> real GDP falls --> total income falls --> imports fall --> net exports rise
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