When Interest Rates Rise in the United States, What Is

Multiple Choice

When interest rates rise in the United States, what is the effect on net exports and aggregate expenditure?

A) Inflows of foreign savings cause the dollar to depreciate, and this increases exports and reduces imports, leading to a rise in net exports and a rise in aggregate expenditure.
B) Government expenditure rises, and this increases imports, net exports, and aggregate expenditure.
C) The real value of savings increases, leading to increased imports and decreased exports, and this causes net exports and aggregate expenditure to fall.
D) Inflows of foreign savings cause the dollar to appreciate, and this reduces exports and increases imports, leading to a fall in net exports and a fall in aggregate expenditure.