In the Portfolio Balance Model, Other Things Equal, the Issuance

Multiple Choice

In the portfolio balance model, other things equal, the issuance of new bonds by a home corporation will __________ the domestic interest rate and, especially if home and Foreign bonds are very good substitutes for each other, will lead to __________ of the Home currency.

A) decrease; a depreciation
B) decrease; an appreciation
C) increase; a depreciation
D) increase; an appreciation