Question: Compare the relative effectiveness of fiscal and monetary policy under
Compare the relative effectiveness of fiscal and monetary policy under (a) fixed; (b) free-floating exchange rates. How is the effectiveness influenced by the elasticity of supply of international finance?
Answer to relevant QuestionsIf both demand and supply change, and if we know which direction they have shifted but not how much, why is it that we will be able to predict the direction in which either price or quantity will change, but not both? ...What will be the effects on the domestic economy under free-floating exchange rates if there is a rapid expansion in world economic activity? What will determine the size of these effects?Under what circumstances does a growth in financial flows make exchange rates less stable?Would the world benefit from the general imposition of controls on the movement of international finance?What are the advantages and disadvantages of debt swapping as a means of reducing the debts of developing countries?
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