Which of the Following Statements Is True with Respect to Contractionary

Multiple Choice

Which of the following statements is true with respect to contractionary fiscal policy?

A) A contractionary fiscal policy leads to lower interest rates.
B) Lower interest rates lead to capital inflows.
C) Capital inflows lead to a depreciation of the currency.
D) A contractionary fiscal policy is the cause of current account deficits.
E) Capital flows do not affect the current account.