A Contractionary Fiscal Policy Negates Some of the Leftward Shift

Multiple Choice

A contractionary fiscal policy negates some of the leftward shift of the aggregate demand curve because the resulting fall in interest rates

A) increases the quantity of investment, raises the exchange rate and boosts net exports.
B) discourages savings, decreases the quantity of investment, raises the exchange rate, and reduces net exports.
C) increases the quantity of investment, lowers the exchange rate, and boosts net exports.
D) discourages savings, increases consumption, and reduces the quantity of investment and imports.