Which of the Following Is a Correct Statement About the Effects

Multiple Choice

Which of the following is a correct statement about the effects of monetary and fiscal policies?

A) Monetary policy is effective under a fixed exchange rate regime, but not under flexible rates.
B) A monetary shock will shift the aggregate demand curve in the same direction, whether exchange rates are fixed or flexible.
C) A real shock will shift the aggregate demand curve under fixed but not flexible exchange rates.
D) Monetary policy can always be used to correct real shocks, whether exchange rates are fixed or flexible.