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 that households decide to increase consumption because of,for example,an increase in consumer confidence.Given this information,we would expect which of the following to occur?

A) an increase in the domestic interest rate
B) a reduction in E
C) an increase in E
D) an increase in investment
E) none of the above