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What Is the Correct Order of Events Following an Expansionary

Question 13

Multiple Choice

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


A) Interest rates rise,overall balance-of-payments may improve,money supply falls to defend fixed exchange rate
B) Production and income rise,money supply falls to defend fixed exchange rate,capital flows in
C) Interest rate rises,capital flows in,overall balance-of-payments may improve,money supply rises to defend fixed exchange rate
D) Production and income rise,money supply falls to defend fixed exchange rate,overall balance-of-payments may improve

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