What Is the Correct Order of Events Following an Expansionary

question 16

Multiple Choice

What is the correct order of events following an expansionary monetary policy with a fixed exchange rate?

• A)Interest rate falls,investment and income rise,current account worsens,overall balance-of-payment worsens
• B)Interest rate falls,capital account improves,money supply falls in order to maintain fixed exchange rate
• C)Capital flows out,interest rate falls,overall balance-of-payments worsens
• D)interest rate increases,capital flows in and balance-of-payment improves

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