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A fall in consumer confidence about the future, which induces consumers to spend less and save more, will, according to the large open economy model
A fall in consumer confidence about the future, which induces consumers to spend less and save more, will, according to the large open economy model with floating exchange rates, lead to:
A. decrease in interest rates, decrease in output, appreciation of the exchange rate, and a decrease in net exports.
B. no change in consumption or income.
C. decrease in interest rates, decrease in output, depreciation of the exchange rate, and increase in net exports.
D. no change in income or net exports.
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