1. Consider the following statement: "Fiscal policy is a very precise tool for controlling aggregate demand. If the government wants to increase aggregate demand by $5 billion, all it has to do is to carry out exactly $5 billion worth of government spending". Is this statement true or false? Explain. In your answer, consider both a closed economy and an open economy. Also, consider the difference between fixed and floating exchange rates in the open economy. (10 marks)