If a country adapts an expansionary monetary policy: A. the domestic interest rate falls, demand for the domestic currency decreases, supply of the B. domestic currency increases and the effect on the exchange rate is ambiguous. the domestic interest rate increases, demand for the domestic currency increases, supply of the domestic currency decreases and the exchange rate increases. C. the domestic interest rate falls, demand for the domestic currency decreases, supply of the domestic currency increases and the exchange rate decreases. D. D. the domestic interest rate falls, demand for the domestic currency remains unchanged, supply of the domestic currency increases and the exchange rate decreases. E the domestic interest rate falls, demand for the domestic currency increases, supply of the domestic currency increases and the exchange rate decreases.
