How does an increase in government spending ultimately affect the central bank's balance sheet under a fixed exchange rate?

A$.$ The central bank's foreign assets fall and domestic assets increase.

B$.$ The central bank's foreign assets increase and domestic assets fall.

C$.$ The central bank's foreign assets rise as do domestic liabilities $($currency in circulation$).$

D$.$ The central bank's foreign assets fall as do domestic liabilities $($currency in circulation$).$

E$.$ A change in domestic liabilities is offset by the change in deposits held by private banks.

Answer B was incorrect