How Is the AA Schedule Derived

question 88

Multiple Choice

How is the AA schedule derived?

• A) The AA schedule has a positive slope because an increase in output leads to a depreciation of the currency.
• B) The AA schedule has a negative slope because an increase in output leads to a decrease in the domestic interest rate.
• C) The AA schedule has a negative slope because an increase in output leads to an increase in the domestic interest rate and a domestic currency appreciation.
• D) The AA schedule has a positive slope because an increase in the money supply leads to an increase in the domestic interest rate.
• E) The AA schedule has a positive slope because a decrease in output leads to a depreciation of the currency.