The higher domestic interest rate resulting from an expansionary fiscal policy in Canada will tend to:
A)increase domestic investment spending.
B)increase Canadian exports.
C)increase domestic consumption spending.
D)decrease Canadian exports.

Question

Quizplus · Accepted Answer

An expansionary fiscal policy can lead to higher domestic interest rates, which can appreciate the Canadian dollar, making exports more expensive and thus decreasing Canadian exports.

The Higher Domestic Interest Rate Resulting from an Expansionary Fiscal