Consider Mundell's Model Under Fixed Exchange Rate and Select the False

Multiple Choice

Consider Mundell's model under fixed exchange rate and select the false statement from the following statements:

A) Monetary policy is ineffective to remove recessionary gap.
B) Fiscal policy has strong short-run effects to fight recession.
C) Monetary policy is powerful, while fiscal policy is powerless.
D) If the world interest rate increases, the domestic economy's investment will decline and its GDP will decline.