Which One of the Following Statements Is the Most Accurate

question 65

Multiple Choice

Which one of the following statements is the most accurate?

• A) Fiscal policy has the same effect on output under fixed and flexible exchange rate regimes.
• B) Fiscal policy affects output more under fixed than under flexible exchange rate regimes.
• C) Fiscal policy affects output less under fixed than under flexible exchange rate regimes.
• D) Fiscal policy cannot affect output under fixed exchange rate but does affect output under flexible exchange rate regimes.
• E) Fiscal policy can affect output under fixed exchange rate but does not affect output under flexible exchange rate regimes.

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