With the Foreign Interest Rate in the IS Model, an Increase

Multiple Choice

With the foreign interest rate in the IS model, an increase in the foreign interest rate causes ________ because ________.

A) the IS curve to shift right; it leads to a depreciation of the domestic real exchange rate
B) rightward movement along the IS curve; it leads to a depreciation of the domestic real exchange rate
C) the IS curve to shift left; it leads to a depreciation of the domestic real exchange rate
D) the IS curve to shift right; it leads to an appreciation of the domestic real exchange rate
E) the IS curve to stay put; the change in investment and net exports offset each other