Question
Which one of the following statements is the MOST accurate? A) Under a fixed exchange rate, monetary policy cannot affect the economy's money supply or
Which one of the following statements is the MOST accurate? A) Under a fixed exchange rate, monetary policy cannot affect the economy's money supply or output B) Under a flexible exchange rate, monetary policy cannot affect the economy's money supply or output C) Under a fixed exchange rate, fiscal policy has no effect on output. D) Under a fixed exchange rate, monetary policy's effectiveness is diminished, but can still affect output as long as it has sufficient foreign reserves to use to adjust the default risk-premium. E) Under a fixed exchange rate, fiscal policy is less effective than under a floating exchange rate.
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