An expansionary monetary policy lowers the real interest rate, causing the domestic currency to appreciate; net exports will result in a depreciating currency. Hence, Option A is correct.
What is an expansionary monetary policy?
It is a type of macroeconomic monetary policy that aims to increase the rate of monetary expansion. Use of this policy is done to stimulate the growth of the domestic economy.
The operation of the expansionary monetary policy is by either expanding the money supply faster than usual or lowering short-term interest rates. This whole policy is enacted by central banks and comes about through open market operations.
Therefore, Option A is correct.
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