In the Mundell Analysis in Which, in a Situation of Fixed

Multiple Choice

In the Mundell analysis in which, in a situation of fixed exchange rates, a country is using monetary and fiscal policy to attain "external balance" (i.e., balance-of-payments equilibrium) and "internal balance" (i.e., full employment without inflation) , the country __________. In this context, if the country has a balance-of-payments surplus at the same time that it has inflation, the country should engage in __________.

A) should assign monetary policy to the attainment of internal balance and fiscal policy To the attainment of external balance; expansionary ("easy") monetary policy and contractionary ("tight") fiscal policy
B) should assign monetary policy to the attainment of internal balance and fiscal policy to the attainment of external balance; contractionary ("tight") monetary policy And expansionary ("easy") fiscal policy
C) should assign monetary policy to the attainment of external balance and fiscal policy To the attainment of internal balance; expansionary ("easy") monetary policy And contractionary ("tight") fiscal policy
D) should assign monetary policy to the attainment of external balance and fiscal policy To the attainment of internal balance; contractionary ("tight") monetary policy And expansionary ("easy") fiscal policy