The value of the spending multiplier decreases when

The TB (i.e., X- M) is part of the short-run spending equation. With sticky prices, what would be the effect on the TB with an increase (depreciation) of the home nation's exchange rate?

a. Consumers in the home nation would find it more expensive to buy domestic goods compared to foreign goods, and the trade balance would decrease. b. Consumers in the home nation would cut back on both domestic and foreign goods and the trade balance would decrease. c. Consumers in the home nation would increase spending on both domestic and foreign goods, and the trade balance would be unchanged. d. Consumers in the home nation would increase spending on domestic goods and decrease spending on foreign goods, causing the trade balance to increase.

If the Federal Reserve increases its bond purchases, the short-run effects will be

a. an increase in the money supply and lower real interest rates. b. a decrease in the money supply and lower real interest rates. c. an increase in the money supply and higher real interest rates. d. a decrease in the money supply and higher real interest rates.