A Decrease in Government Purchases

Multiple Choice

A decrease in government purchases

A) shifts the IS curve up and to the right,leading to a higher interest rate and an appreciation of the exchange rate.
B) shifts the IS curve down and to the left,leading to a lower interest rate and a depreciation of the exchange rate.
C) shifts the LM curve left,leading to a lower interest rate and a depreciation of the exchange rate.
D) shifts the LM curve right,leading to a lower interest rate and a depreciation of the exchange rate.