From Volume 2, Exam 1 Afternoon session #76 It’s asking whether this statement is true: Due to its stimulative nature expansionary monetary policy will increase imports and decrease exports. This change is measured by the current account and the CA will move towrds deficit. Schwesers answer which i disagree with: An expansionary monetary policy will lower value of the dollar and discourage imports and make U.S goods more competitive in the international markets. …The CA balance moves towards surplus due to lower imports and higher exports. Isn’t this exactly the reverse? CA will decrease due to higher imports from higher econ growth. Can someone confirm?
.
CPK, weren’t you explaining the fiscal policy?
yes i noted that both accounts should be in deficit
I insist that this question should have A as the correct answer.