Question

Which of the following statements is NOT CORRECT in the context of an Open Economy IS-LM Model under Floating Exchange Rate (with fixed price) and Perfect Capital Mobility?

A An expansionary fiscal policy would appreciate the domestic currency value
B An expansionary monetary policy would depreciate the domestic currency value
C Exchange rate has significant impact on determining the equilibrium level of income and employment
D Monetary policy is fully effective in determining income and employment whereas fiscal policy is ineffective
Practice Next

Hey! Ask a query