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 decrease consumption because of,for example,a reduction in consumer confidence.Given this information,we would expect which of the following to occur?

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