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Suppose P , P* , Y , Y* , , R , T , and G are exogenously given and the interest parity condition holds.

Suppose P, P*, Y, Y*, , R, T, and G are exogenously given and the interest parity condition holds. Then aggregate "preferred" expenditure, D, rises when:

a) The domestic aggregate price level rises

b) The foreign aggregate price level rises

c) The nominal interest rate rises

d) Net taxes collected by the government rises

e) All of the above

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