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Assume perfect capital mobility. Under a fixed exchange rate system, expansionary fiscal policy causes income to _____, while under flexible exchange rates expansionary fiscal policy

  1. Assume perfect capital mobility. Under a fixed exchange rate system, expansionary fiscal policy causes income to _____, while under flexible exchange rates expansionary fiscal policy causes income to _____.

    A.

    increase; increase

    B.

    increase; remain unchanged

    C.

    increase; decrease

    D.

    remain unchanged; increase

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