If a Government Started with a Deficit and Moved to a Surplus

Multiple Choice

If a government started with a deficit and moved to a surplus, which statement would best describe the effects of these changes?

A) Domestic investment and the real exchange rate would rise.
B) Domestic investment and the real exchange rate would fall.
C) Domestic investment would rise, and the real exchange rate would fall.
D) Domestic investment would fall, and the real exchange rate would rise.