In Two-Period SOE Model with Production, an Increase in the World

Multiple Choice

In two-period SOE model with production, an increase in the world real interest rate

A) increases domestic output and increases the current account surplus.
B) increases domestic output and decreases the current account surplus.
C) decreases domestic output and increases the current account surplus.
D) decreases domestic output and decreases the current account surplus.
E) increase aggregate consumption and have no effect on the current account surplus.