An economy is experiencing unemployed resources and has a flexible exchange rate. It reduces interest rates to a level below that in other countries. What is the likely impact on domestic demand for goods and services and on demand for the country’s exports?
- Adomestic demand increase; export demand increase
- Bdomestic demand increase; export demand decrease
- Cdomestic demand decrease; export demand decrease
- Ddomestic demand decrease; export demand increase