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Under Perfect Capital Mobility and Fixed Exchange Rates, Expansionary _____

Question 13

Multiple Choice

Under perfect capital mobility and fixed exchange rates, expansionary _____ is a futile attempt because the _____.


A) fiscal policy; LM curve effectively is vertical.
B) monetary policy; LM curve effectively is the same as the FE curve.
C) fiscal policy; interest rate does not change.
D) monetary policy; IS curve will shift to the left.

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