Multiple Choice
Assume that policy makers are pursuing a fixed exchange rate regime. Now suppose that a fiscal contraction is implemented. Such a policy will tend to cause which of the following to occur?
A) A decrease in the exchange rate.
B) A decrease in Y.
C) A decrease in the domestic interest rate.
D) An increase in the money supply.
E) An increase in the price level.
Correct Answer:
Verified
Correct Answer:
Verified
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