Increase in the supply of money in the economy leads to __________ .
Trade deficit corresponds to the spending channel of monetary expansion: increased expenditure raises demand for imports. Higher import expenditure worsens the trade balance.
Choose your answer
Increase in the supply of money in the economy leads to __________ .
Answer and explanation
Correct answer C
Trade deficit corresponds to the spending channel of monetary expansion: increased expenditure raises demand for imports. Higher import expenditure worsens the trade balance.
Practice for these exams
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Maharashtra and Goa SET (MH SET)