the IS-LM model for an open economy, fiscal contraction implies the ... Time le Questi Not ye Marke 1.00 P Fla Select one: • A. IS curve will shift to the left; the level of output and income decreases. The interest rate decreases, there is a capital outflow, and the exchange rate depreciates. • B. IS curve will shift to the right, the level of output and income increases. The interest rate increases, there is a capital inflow, and the exchange rate appreciates. • C. IS curve will shift to the left; the level of output and income decreases. Since the central bank sets the interest rate, the interest rate will be unchanged, and the exchange rate depreciates. • D. IS curve will shift to the left; the level of output and income decreases. Since the central bank sets the interest rate, the interest rate will be unchanged, and therefore the exchange rate is also unchanged.