Which One of the Following Statements Is the MOST Accurate

question 38

Multiple Choice

Which one of the following statements is the MOST accurate?

• A) Fiscal policy has the same effect on output under fixed and flexible exchange rate regimes.
• B) Fiscal policy affects output more under fixed than under flexible exchange rate regimes.
• C) Fiscal policy affects output less under fixed than under flexible exchange rate regimes.
• D) Fiscal policy cannot affect output under fixed exchange rate but does affect output under flexible exchange rate regimes.
• E) Fiscal policy can affect output under fixed exchange rate but does not affect output under flexible exchange rate regimes.

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Definitions:

Mediating Structures

Intermediate organizations or networks that facilitate the interaction between individuals and larger institutions, promoting social integration and cohesion.

Rational Acts

Actions or decisions that are made based on logical reasoning and coherent analysis, aiming at maximizing benefits while minimizing costs and risks.

Voice of the People

A term used to describe the opinions, wishes, or preferences of the general public or a particular segment of society.

Basis of Economy

The foundational elements or activities that support and drive the economic systems, such as production, consumption, and trade.