With Floating Exchange Rates, Expansionary Fiscal Policy Is More Effective

question 13

Multiple Choice

With floating exchange rates, expansionary fiscal policy is more effective in increasing output when the:

• A)FE curve is flatter than the LM curve.
• B)FE curve is steeper than the LM curve.
• C)FE curve is horizontal and the LM curve is vertical.
• D)FE curve coincides with the LM curve.

---

Definitions:

Echo

A sound that is reflected off a surface and heard again by its source or listener, often used in the study of acoustics.

Icon

in a general sense, denotes a symbol or graphic representation on a computer screen or a symbolically significant figure or thing in wider culture.

Retain Information

The ability to maintain and keep information in memory over time.

Memory

The cognitive process involving the encoding, storing, and retrieving of information experienced or learned.