If the central bank raises interest rates it will A) lower aggregate demand and raise the exchange rate. B) raise aggregate demand and lower the exchange rate. C) lower aggregate demand and lower the exchange rate. D) raise aggregate demand and raise the exchange rate.

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter19: International Finance And The Foreign Exchange Market
Section: Chapter Questions
Problem 15CQ
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If the central bank raises interest rates it will       

A) lower aggregate demand and raise the exchange rate.

B) raise aggregate demand and lower the exchange rate.

C) lower aggregate demand and lower the exchange rate.

D) raise aggregate demand and raise the exchange rate.

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