Under perfect capital mobility and a floating exchange rate system, ex

Under perfect capital mobility and a floating exchange rate system, expansionary fiscal policy leads to

a. an increase in income and the interest rate.
b. no change in the interest rate and a fall in the trade balance.
c. no change in the interest rate and a decrease in income.
d. an increase in interest rates and a fall in the trade balance.
e. no change in interest rates and the exchange rate.

ANSWER

B