Which of the Following Is NOT True with Fixed Exchange

question 35

Multiple Choice

Which of the following is NOT true with fixed exchange rates and perfect capital mobility?

• A)Monetary policy is not effective in either the long-run or the short-run.
• B)Sterilization is impossible.
• C)Fiscal policy is very powerful.
• D)Monetary policy is very powerful.

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Definitions:

Government Spending

Expenditures by government entities on goods and services, including infrastructure, public services, and social welfare programs.

GDP

Totaling the market value of all final goods and services produced inside a country within a set period results in the Gross Domestic Product.

Inflations

The speed at which the overall price level of goods and services increases, leading to a decrease in buying power.

Taxes

Compulsory financial charges imposed by a government on individuals or entities to fund public expenditures.