In 1995 House Speaker Newt Gingrich Threatened to Send the United

Multiple Choice

In 1995 House Speaker Newt Gingrich threatened to send the United States into default on its debt.During the day of this announcement,U.S.interest rates rose and the real exchange rate of the U.S.dollar depreciated.Which of these changes is consistent with the results of the open-economy macroeconomic model?

A) the increase in U.S.interest rates
B) the depreciation of the real exchange rate of the U.S.dollar
C) Both a and b are consistent.
D) Neither a nor b are consistent.