Which of the Following Is Most Effective Under a Fixed

question 9

Multiple Choice

Which of the following is most effective under a fixed exchange-rate regime?

• A)Monetary policy if there is a high capital mobility
• B)Fiscal policy if there is a low capital mobility
• C)Fiscal policy if there is a high capital mobility
• D)Monetary policy if there is a low capital mobility

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Definitions:

T-bill Rate

The interest rate that U.S. Treasury bills, short-term government securities, yield.

Market Return

The total return of the entire stock market or a specific market segment, encompassing capital gains and dividends over a specified period.

Systematic Risk

The risk inherent to the entire market or a segment thereof, also known as market risk, which cannot be eliminated through diversification.

Stock Market

A public market for buying, selling, and trading stocks (shares) of publicly-held companies.