-In the Above Figure, If the Economy Is Initially at Point

Multiple Choice

-In the above figure, if the economy is initially at point D, then if the Fed lowers the federal funds rate

A) the supply of loanable funds decreases, the real interest rate falls, and the AD curve shifts rightward.
B) other short-term interest rates fall, net exports increase, and the AD curve shifts rightward.
C) the exchange rate rises, investment increases, and the SAS curve shifts rightward.
D) the demand for loanable fund and supply of loanable funds both increase by the same amount so that the AD curve shifts rightward.