A Contractionary Fiscal Policy Negates Some of the Leftward Shift

question 112

Multiple Choice

A contractionary fiscal policy negates some of the leftward shift of the aggregate demand curve because the resulting fall in interest rates

• A) increases the quantity of investment, raises the exchange rate and boosts net exports.
• B) discourages savings, decreases the quantity of investment, raises the exchange rate, and reduces net exports.
• C) increases the quantity of investment, lowers the exchange rate, and boosts net exports.
• D) discourages savings, increases consumption, and reduces the quantity of investment and imports.

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