Which one of the following, A, B, C or D, represents the most likely outcome of a reduction in the central bank's policy interest rate for an economy, all other things being equal?
Market price of government bondsCommercial bank lendingExchange rate of the domestic currencyARiseFallRiseBFallRiseRiseCRiseRiseFallDFallFallRise \begin{array}{|c|c|c|c|} \hline & \text{Market price of government bonds} & \text{Commercial bank lending} & \text{Exchange rate of the domestic currency} \\ \hline \mathbf{A} & \text{Rise} & \text{Fall} & \text{Rise} \\ \hline \mathbf{B} & \text{Fall} & \text{Rise} & \text{Rise} \\ \hline \mathbf{C} & \text{Rise} & \text{Rise} & \text{Fall} \\ \hline \mathbf{D} & \text{Fall} & \text{Fall} & \text{Rise} \\ \hline \end{array} ABCDMarket price of government bondsRiseFallRiseFallCommercial bank lendingFallRiseRiseFallExchange rate of the domestic currencyRiseRiseFallRiseMarket price of government bonds: Rise; Commercial bank lending: Fall; Exchange rate of the domestic currency: Rise
Market price of government bonds: Fall; Commercial bank lending: Rise; Exchange rate of the domestic currency: Rise
Market price of government bonds: Rise; Commercial bank lending: Rise; Exchange rate of the domestic currency: Fall
Market price of government bonds: Fall; Commercial bank lending: Fall; Exchange rate of the domestic currency: Rise
