The combined effects of a fiscal contraction and a monetary expansion are
A)higher real interest rates.
B)exchange rate depreciation.
C)increased current account deficit.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A fiscal contraction typically leads to lower interest rates, while a monetary expansion also aims to lower interest rates, both of which can lead to exchange rate depreciation.

The Combined Effects of a Fiscal Contraction and a Monetary