Suppose a Country Switches from a Fixed to a Flexible

Multiple Choice

Suppose a country switches from a fixed to a flexible exchange rate.Which of the following will occur as a result of this change?

A) monetary policy will become a less effective tool for changing output.
B) a given change in government spending will now have a greater effect on output.
C) both fiscal and monetary policy will become more effective in changing GDP.
D) both fiscal and monetary policy will become completely ineffective in changing GDP.
E) none of the above