All of the above. None of the above. This question was a bit tricky. Although the country described above has fixed exchange rates, their fixed E regime cannot be credible if they have permanent high inflation. See the chart below note that Investment is a function of both output and interest rates, so its change is ambiguous.
Residential investment is sensitive to interest rates for the same reason as real consumption.
By the interest rate parity equation, we know that when E rises, domestic interest rates fall, so interest rates and real imports move in the same direction. Throughout his question, assume no effect on domestic output prices. Use the IS-LM framework to answer this question cutting taxes shifts the IS curve out. This increases output and interest rates, and leads to an appreciation of the currency because foreign investors buy domestic currency to purchase domestic bonds. Real exports Real exports would fall in response to a stronger domestic currency.