Suppose a temporary rise occurs in world demand for domestic products. Using the line drawing tool, illustrate the impact of this event. Properly label your line. Carefully follow the instructions above and only draw the required object. Now let the government use temporary fiscal contraction to restore full employment. In this case the policy re-establishes full employment A. and restores the currency to its initial value. B. but causes the currency to further appreciate. C. and restores the currency to an unknown value. D. but has an indeterminate effect on the exchange rate.

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