How Does Contractionary Monetary Policy Affect Interest Rates and Net

Multiple Choice

How does contractionary monetary policy affect interest rates and net exports in an open economy?

A) Contractionary monetary policy increases exports and reduces imports because of higher interest rates.
B) Contractionary monetary policy reduces exports and increases imports because of higher interest rates.
C) Contractionary monetary policy increases exports and increases imports because of lower interest rates.
D) Contractionary monetary policy reduces exports and reduces imports because of lower interest rates.