For This Question,assume That There Is a Simultaneous Increase in Government

Multiple Choice

For this question,assume that there is a simultaneous increase in government spending and monetary contraction.In a flexible exchange rate regime,we know with certainty that such a policy mix will cause which of the following?

A) an increase in the domestic interest rate
B) an increase in the exchange rate
C) a reduction in net exports
D) all of the above
E) only A and C