Which of the Following Does NOT Occur When a Country

Multiple Choice

Which of the following does NOT occur when a country with floating exchange rates increases the money supply?

A) Interest rates fall causing capital outflows in the short run.
B) Interest rates initially increases causing real spending, production, and income to fall.
C) The current account will initially tend to worsen as a result of the decrease in interest rates.
D) Aggregate demand will increase which will lead to an increase in the price level.