Question

Explain why the net export effect of a contractionary monetary policy reinforces the usual impact that monetary policy has on equilibrium real GDP per year in the short run.

Short answer

The contractionary financial strategy of the Fed started as a decrease in the quantity of money available for use to control the expansion and decline of the GDP.

Step-by-step solution

introduction

Contractionary Policy of Fed-A strategy drives the focal financial power Fed, to diminish the quantity of money available for use is the contractionary financial approach.

explanation 

The net commodities impact resulting from a contractionary strategy prompts higher products from and lower imports in the country. As such, the Net Exports increment because of the Fed's contractionary money related approach. As the cost falls, the interest increments and this is outlined by development along the AD bend. Falling interest prompts higher Net commodities goals for the interest to increment facilitating the development in the interest.