[Solved] Which Set of Events Would Best Explain the Effects of a Contractionary

Question 139
Multiple Choice

Which set of events would best explain the effects of a contractionary fiscal policy on net exports?

A) It decreases domestic interest rates, causing the dollar to appreciate and net exports to decrease.
B) It decreases domestic interest rates, causing the dollar to depreciate and net exports to increase.
C) It decreases domestic interest rates, causing the dollar to depreciate and net exports to decrease.
D) It increases domestic interest rates, causing the dollar to appreciate and net exports to decrease.

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