A contractionary fiscal policy:
A) puts upward pressure on interest rates causing the government to sell foreign exchange.
B) puts upward pressure on interest rates causing the government to buy foreign exchange.
C) puts downward pressure on interest rates causing the government to buy foreign exchange.
D) puts downward pressure on interest rates causing the government to sell foreign exchange.
E) does not affect interest rates or the exchange rate.

Question

Quizplus · Accepted Answer

The Answer of A contractionary fiscal policy:
A) puts upward pressure on interest rates causing the government to sell foreign exchange.
B) puts upward pressure on interest rates causing the government to buy foreign exchange.
C) puts downward pressure on interest rates causing the government to buy foreign exchange.
D) puts downward pressure on interest rates causing the government to sell foreign exchange.
E) does not affect interest rates or the exchange rate.

A Contractionary Fiscal Policy