Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model?

a. The real risk-free interest rate falls and current international transactions become more positive (or less negative).
b. The real risk-free interest rate rises and current international transactions become more negative (or less positive).
c. The real risk-free interest rate and current international transactions remain the same.
d. The real risk-free interest rate rises and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.

.A