In the diagram below, under fixed exchange rates, the automatic adjustment mechanism will lead to

A) a fall in the money supply, a fall in income, and a fall in the interest rate.
B) a rise in the money supply, a fall in income, and a fall in the interest rate.
C) a fall in the money supply, a rise in income, and a rise in the interest rate.
D) a fall in the money supply, a fall in income, and a rise in the interest rate.

Question

In the diagram below, under fixed exchange rates, the automatic adjustment mechanism will lead to

A) a fall in the money supply, a fall in income, and a fall in the interest rate. 
B) a rise in the money supply, a fall in income, and a fall in the interest rate. 
C) a fall in the money supply, a rise in income, and a rise in the interest rate. 
D) a fall in the money supply, a fall in income, and a rise in the interest rate.

Quizplus · Accepted Answer

The Answer is D

In the Diagram Below, Under Fixed Exchange Rates, the Automatic