Question: Please use ONE page maximum for the course writing assignment. No hand written paper will be accepted.
1- Explain how foreign trade effect (also called the net export effect) could make the effects of an expansionary monetary policy (easy money policy) stronger. (5 points)
2- Explain how foreign trade effect (also called the net export effect) could make the effects of an contractionary monetary policy (tight money policy) stronger. (5 points)
Please be advised that all answers will be checked for authenticity. Copies from internet sources may receive a grade of zero for the assignment.
Hint: In chapter 8 read the foreign trade effect and the mechanism by which it works. In chapter 15 learn about monetary policy and how its tools go to work in increasing and/or decreasing the money supply. Then answer the above questions by explaining how the foreign trade effect can support the impact of monetary policies.