If the Fed Reduces the Money Supply to Reduce Inflation

Multiple Choice

If the Fed reduces the money supply to reduce inflation, a floating exchange rate will aid the Fed in fighting inflation because

A) as the money supply is decreased, the interest rate will increase, and the price of U.S. exports will fall and the price of U.S. imports will rise.
B) as the money supply is decreased, the interest rate will increase, and the price of U.S. exports will rise and the price of U.S. imports will fall.
C) as the money supply is decreased, the interest rate will increase, and the price of both U.S. exports and U.S. imports will rise.
D) as the money supply is decreased, the interest rate will increase, and the price of U.S. exports and U.S. imports will fall.