According to the Mundell-Fleming Model, Under Floating Exchange Rates a Fiscal

question 98

Multiple Choice

According to the Mundell-Fleming model, under floating exchange rates a fiscal expansion:

• A) lowers the exchange rate, but a monetary expansion raises it.
• B) raises the exchange rate, but a monetary expansion or an import restriction lowers it.
• C) or an import restriction lowers the exchange rate, but a monetary expansion raises it.
• D) or an import restriction raises the exchange rate, but a monetary expansion lowers it.

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