In a Flexible Exchange Rate System with Perfect Capital Mobility

question 19

Multiple Choice

In a flexible exchange rate system with perfect capital mobility

• A)expansionary monetary policy will appreciate the domestic currency
• B)fiscal expansion is very effective in stimulating aggregate demand
• C)fiscal expansion causes a depreciation of the domestic currency
• D)the domestic interest rate can't substantially deviate from the world interest rate for very long
• E)all of the above

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