A contractionary monetary policy tends to be more effective than a contractionary fiscal policy at strengthening the value of the exchange rate, because a contractionary monetary policy:

A. decreases the interest rate and increases exports, while a contractionary fiscal policy increases both the interest rate and exports.
B. increases the interest rate and decreases exports, while a contractionary fiscal policy decreases both the interest rate and exports.
C. decreases the interest rate and increases imports, while a contractionary fiscal policy increases both the interest rate and imports.
D.  increases the interest rate and decreases imports, while contractionary fiscal policy decreases both the interest rate and imports.

ANSWER:

D