An economy uses a flexible exchange rate. It increases interest rates to a level higher than those in other countries. What is likely to happen to the level of domestic demand for goods and services and to the demand for the country’s exports?
- Adomestic demand: decrease; export demand: decrease
- Bdomestic demand: decrease; export demand: increase
- Cdomestic demand: increase; export demand: decrease
- Ddomestic demand: increase; export demand: increase