Question
Under flexible exchange rates, an expansionary fiscal policy leads to an increase in capital inflow and thus an appreciation of the exchange rate. Explain and
"Under flexible exchange rates, an expansionary fiscal policy leads to an increase in capital inflow and thus an appreciation of the exchange rate." Explain and critically evaluate this statement using both IS-LM-IP and IS-MP-IP models. (5 marks)
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Microeconomics
Authors: Robert S. Pindyck, Daniel L. Rubinfeld
7th edition
8131725995, 8131725993, 978-8131725993
