All other things being equal, a significant and unexpected increase in a central bank's policy interest rate is most likely to lead to which of the following combinations of outcomes in financial and product markets?
A rise in the market price of existing government bonds, an appreciation of the domestic currency, and an increase in the rate of household saving.
A fall in the market price of existing government bonds, an appreciation of the domestic currency, and a decrease in aggregate demand.
An increase in hot money outflows, a depreciation of the domestic currency, and a fall in the cost of household debt servicing.
An increase in commercial bank lending, a fall in the rate of household saving, and an increase in business investment.
