In the Mundell Analysis in Which, in a Situation of Fixed

question 21

Multiple Choice

In the Mundell analysis in which, in a situation of fixed exchange rates, a country is using monetary and fiscal policy to attain "external balance" (i.e., balance-of-payments equilibrium) and "internal balance" (i.e., full employment without inflation) , the country __________. In this context, if the country has a balance-of-payments surplus at the same time that it has inflation, the country should engage in __________.

• A) should assign monetary policy to the attainment of internal balance and fiscal policy To the attainment of external balance; expansionary ("easy") monetary policy and contractionary ("tight") fiscal policy
• B) should assign monetary policy to the attainment of internal balance and fiscal policy to the attainment of external balance; contractionary ("tight") monetary policy And expansionary ("easy") fiscal policy
• C) should assign monetary policy to the attainment of external balance and fiscal policy To the attainment of internal balance; expansionary ("easy") monetary policy And contractionary ("tight") fiscal policy
• D) should assign monetary policy to the attainment of external balance and fiscal policy To the attainment of internal balance; contractionary ("tight") monetary policy And expansionary ("easy") fiscal policy

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Definitions:

Mutual Agreement

Involves a shared or collective consensus or contract between two or more parties on a specific issue, arrangement, or course of action.

Working Relationship

A professional connection between individuals that aims to achieve business or work-related objectives.

Less Ambiguity

Situations or contexts characterized by clear, precise, and easily understandable information or directions, minimizing confusion or misunderstanding.

Internal Change Agents

Employees or individuals within an organization who are tasked with supporting, managing, or leading efforts to initiate and implement organizational changes.