For This Question,assume That Policy Makers Are Pursuing a Fixed

Multiple Choice

For this question,assume that policy makers are pursuing a fixed exchange rate regime.Now suppose a budget is passed that calls for a reduction in government spending.This reduction in government spending will cause which of the following to occur?

A) a reduction in i and an increase in E
B) a reduction in investment
C) no change in output
D) no change in net exports
E) an increase in imports