The IS/LM/BP Analysis Suggests That, Under Flexible Exchange Rates

question 23

Multiple Choice

The IS/LM/BP analysis suggests that, under flexible exchange rates,

• A) monetary policy is less powerful for affecting national income than under fixed Exchange rates.
• B) a country may have difficulty in staying on the LM curve.
• C) expansionary fiscal policy, in theory, may cause either depreciation or appreciation of The home currency.
• D) expansionary fiscal policy will always lead to a decline in national income.

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